ICC Articles

In recent years the developments in international arbitration have included two that appear quite unrelated, but each may have an influence on the other. One of these developments has been the emergence of the so-called 'plausible standard of proof' in mass claims proceedings; the other has been a persistent concern by some that international commercial arbitration is becoming too complex, too costly and too bound by cumbersome technicalities. This leads one to consider whether application of the 'plausible standard of proof'might- in at least some cases-help to make international commercial arbitration simpler, more flexible and less expensive.

International arbitration rules typically provide that each party shall have the burden of proving the facts it relies upon to support its claim or defense (e.g. UNCITRAL Arbitration Rules, Article 24(2)), and that the arbitrators shall determine the admissibility, relevance, materiality and weight of the evidence offered (ibid., Article 25(6)). But, as the Eritrea-Ethiopia Claims Commission has aptly observed, international rules generally 'do not articulate the quantum or degree of proof that a party must present to meet this burden of proof'. ¹

The plausibility standard, which focuses on finding what is 'plausible in the light of the circumstances,' contrasts with burdens of proof typically used in various adjudicative proceedings. It differs, for example, from the test of 'preponderance of the evidence', a standard often applied in international commercial arbitration, that envisages that the evidence of each party is placed on opposite sides of a scale and the award is based on that which has the greater weight-a familiar metaphor symbolized by the classic scales of justice. [Page377:]

It is also different from the requirement to present 'clear and convincing evi-dence'. ²It is far different from the burden to present 'proof beyond a reasonable doubt' applied in some legal systems in criminal cases, but rarely in commercial disputes.

The plausibility standard was first enunciated in the Procedural Rules adopted in 1999 by the first Claims Resolution Tribunal for Dormant Accounts in Switzerland (herein 'CRT-I') having evolved from several earlier mass claims processes. The Tribunal, whose seat was in Zurich, had the task of resolving thousands of claims of victims of Nazi persecution or their heirs who had opened accounts in Swiss banks, often fifty years earlier, and then had been unable to prove ownership of funds in them because the evidence needed to do so had been lost due to the Holocaust. The Article in the CRT-I Procedural Rules that establishes the concept of the plausible standard is headed 'Relaxed Standard of Proof'. It states:

The claimant must show that it is plausible in the light of all the circumstances that he or she is entitled in whole or in part, to the dormant account. The [arbitrators] shall assess all information submitted by the parties or otherwise available to them. They shall at all times have in mind the difficulties of proving a claim after the destruction of the Second World War and the Holocaust and the long time that has elapsed since the opening of the dormant accounts. ³

The Procedural Rules then go on to provide that 'a finding of plausibility requires, inter alia, that all [relevant] documents and other information have been submitted . . . that can reasonably be expected to be produced in the light of the particular circumstances . . .'.

The terms 'relaxed' and 'plausible' standards of proof are not customary in earlier dispute resolution rules or legal texts. Therefore, to clarify their meaning in this context it may be useful to consult standard English dictionary definitions. 'Relaxed' has been defined as meaning, inter alia, 'less strict, severe or rigid'. And to be relaxed is 'to make something such as a rule less strict.' One dictionary defines 'plausible' as 'appearing likely to be true, usually in the absence of proof,' while another includes in its definition of plausible 'appearance of reasonableness', and a third includes 'superficially worthy of belief.' [Page378:]

Can the Plausibility Standard of Proof Developed in Mass Claims Arbitrations also be Useful in Commercial Cases?

Notwithstanding the emphasis on the plausible standard, the CRT-I Rules include an exception for one type of issue deemed particularly sensitive and as to which the claim is to be determined by the preponderance of the evidence. This is significant because it illustrates that the plausibility standard can be applied to some issues in a case while the preponderance standard can be applied to other issues in the same case.

The CRT-I Rules on relaxed standards of proof, which have been followed in a number of later mass claims processes, provide a convenient basis for analyzing whether they or some variation of them are not only valuable in mass claims proceedings, but could also be a useful innovation to simplify and expedite the conduct of some commercial arbitration cases-and thus help to meet the criticism of those who consider that international commercial arbitration has become too 'judicialized', too restricted by technical rules, too expensive and too slow.

An initial question that arises when one considers the use of the plausibility standard in commercial arbitration is whether national courts would recognize agreements to arbitrate that permit application of the plausibility standard and would enforce arbitral awards made on the basis of it. The example of CRT-I is instructive in this respect. Each claimant who submits a claim for resolution by it signs a Claims Resolution Agreement providing that the agreement 'shall be governed by Swiss law', that the 'Tribunal will make its decisions according to the Rules of Procedure for the Claims Resolution Process' and acknowledging that the parties have received a copy of those Rules. As noted, the Rules specifically include the provision on plausibility and are based on the premise that it is valid under Swiss law. The view that the plausibility standard is valid under Swiss law is supported by the fact that a number of leading Swiss legal experts participated in establishing and drafting these provisions as legal advisors to the Swiss Bankers Association, or as counsel to the Independent Claims Resolution Foundation that formed the Tribunal and adopted the Rules, or as part of the Secretariat that played a major role in the process. Switzerland has long experience as a venue for international cases and the conclusions reached there are likely to be influential elsewhere. Although the CRT-I Procedural Rules expressly set forth the plausibility standard, there appears to be little reason why arbitrators could not decide to apply that standard in cases governed by more general rules, such as the UNCITRAL Arbitration Rules, that give the arbitrators the flexibility to determine how the arbitration shall be conducted (Article 15) and the power, as noted above, to determine 'the admissibility, [Page379:]

relevance, materiality and weight of the evidence' (Article 25(6)). Whether arbitrators, in the absence of any such provisions in rules, have the inherent power to apply the plausibility standard is a matter to be considered in the light of the national law governing the arbitral proceeding.

Application of the plausibility standard may be useful not only in large cases that often involve difficult tasks of gathering detailed evidence, but also in smaller cases where the relatively low amounts in dispute make it important to have procedures in which the costs are not disproportionate to the sums at issue. We should welcome discussion and debate on this topic at arbitration conferences and in publications. One can easily imagine programs and articles having titles such as 'The Feasibility of Plausibility'. Arbitral institutions, which have been pioneers in developing 'fast track' and other optional procedures for expediting cases, might well explore this approach and, if they find it sound, might draft supplemental rules and model clauses. This is a project that has sufficient potential to warrant serious consideration in the arbitration community, which has a history of innovation and ingenuity in finding ways by which further to improve the arbitral process. [Page380:]