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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
Introduction
Document production is a central feature of the pre-trial discovery process in United States litigation. Parties have a right to obtain documents from other parties to a lawsuit as well as from non-parties. Requests for documents typically are far-reaching in scope and require parties and non-parties to expend considerable time and expense in responding to such requests. However, the document discovery process is not unique to United States litigation; document requests and document production are generally used in international arbitration in the United States.
This article provides an overview of document production in United States federal court litigation under the Federal Rules of Civil Procedure and how that process is used in international arbitration in the United States. We begin with who is required to produce documents in litigation and what kinds of documents and things (including electronic data) must be produced. Next, we describe the document production process, the obligations that parties have with respect to producing documents and how discovery disputes are resolved. We also discuss what has been called 'e-discovery' in United States litigation, namely the discovery process with respect to electronically stored information, including the impact of the forthcoming 2006 amendments to the Federal Rules of Civil Procedure that specifically concern e-discovery, which will become effective on 1 December 2006.
We then look at how aspects of the document production process in United States litigation have been imported into international arbitrations that have the United States as their seat. Parties and counsel arbitrating international disputes in the United States are facing many of the same document production issues that arise in United States litigation. Arbitrators increasingly are being asked to resolve document disputes and to tackle the complexities of e-discovery. And the document production process occurs in a context in which parties, counsel and arbitrators often have differing perspectives on what document production means. [Page44:]
I. Document production in federal court litigation
A. Principles underlying the Federal Rules of Civil Procedure
A fundamental principle underlying the Federal Rules of Civil Procedure (the 'Federal Rules') is a litigant's right to 'pre-trial' discovery, which includes the disclosure of documents and information held by another party in advance of trial.2 The discovery mechanisms established by those rules were intended to make the pre-trial discovery process serve as '(1) a device . . . to narrow and clarify the basic issues between the parties, and (2) as a device for ascertaining the facts, or information as to the existence or whereabouts of facts, relative to those issues'.3 The Federal Rules advanced the stage at which the disclosure of documents and information is required from the time of trial to the period preceding it. Such pretrial disclosure enables litigants to obtain the fullest possible knowledge of the issues and facts before trial, so as to 'make a trial less a game of blindman's buff and more a fair contest with the basic issues and facts disclosed to the fullest practicable extent'.4
B. Federal Rules regarding document production
The Federal Rules contain a number of provisions relating to the production of documents. Rule 26 defines the scope of discoverable information and when it must be disclosed. Rule 34 sets forth the procedure by which parties to a case may request documents from other parties to the litigation and what the responding party is required to produce. Rule 45 permits a party to subpoena documents from a non-party. In the event that a party fails to comply with its discovery obligations, a federal court can compel discovery and impose sanctions on the non-complying party under Rule 37.
Both parties and non-parties to a lawsuit can be required to produce documents in a United States litigation. A party's obligation to produce documents is governed by Rules 26 and 34.5 A non-party can be required to produce documents under Rules 26 and 45.6 The scope of discovery obtainable from a party and a non-party is the same under the Federal Rules.7
Parties can seek a wide range of documents and things from other parties and non-parties. Rule 26(b) describes the broad scope of discoverable information to include 'any matter, not privileged, that is relevant to the claim or defense of any party'.8 This means that a party may obtain non-privileged documents regarding any matter that is relevant to a claim or defense of any party to the case. Such documents need not be admissible at trial: 'Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.'9 As long as the requested material relates to a [Page45:] claim or defense in the case, it is discoverable. However, Rule 26(b)(2) permits a court to restrict unduly burdensome or expensive discovery.10
Rule 34 provides an illustrative list of the kinds of 'documents' and other items that are discoverable. A party can be required to produce writings, drawings, graphs, charts, photographs, phonorecords, and other data compilations from which information can be obtained.11 Electronically stored information is also discoverable under Rule 34(a).12 The United States Supreme Court recently approved an amendment to the definition of 'documents' in the Federal Rules to include expressly 'electronically stored information'. This amendment is scheduled to go into effect as of 1 December 2006.
A party is required to produce documents that are within its 'possession, custody or control'.13 This requirement is not limited to documents that a party physically possesses. Courts interpret 'custody or control' liberally. A party has 'control' over a document if the party has a legal right to obtain the document.14 In the corporate context, some federal courts have found that documents held by a corporation's agents are within the corporation's possession, custody and control.15 In some cases courts have required a corporation to produce documents held by parent companies, subsidiaries and even affiliates.16
There are a number of legal privileges that a party may invoke as a ground for not producing requested documents. If a party invokes an applicable privilege, the party must describe the nature of the documents being withheld in a manner that will enable the opposing party to determine whether the privilege applies.17 Typically this is done in the form of a 'privilege log', which is a chart describing each document withheld and the privilege(s) asserted.
The two most commonly asserted privileges in United States litigation are the attorney-client privilege and the attorney work-product privilege.18 The attorney-client privilege covers confidential communications between a lawyer and the client for the purpose of seeking or providing legal advice or assistance. If a party can establish that a document is covered by the attorney-client privilege, the document does not have to be produced, even if the requesting party can show substantial need and undue hardship. However, if a party discloses the substance of its attorney-client communication to a third person, it may constitute a waiver of the privilege and thereby destroy the protection from disclosure. [Page46:]
The attorney work-product privilege provides protection for the work-product of a lawyer prepared in connection with or in anticipation of litigation. However, this protection is not absolute. Under Rule 26, a requesting party can obtain attorney work-product by showing that the requesting party has 'substantial need of the materials' to prepare its case and that it is 'unable without undue hardship to obtain the substantial equivalent of the materials by other means'.19 If the requesting party is able to make such a showing, the court can order production of attorney work-product but 'shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation'.20 As with the attorney-client privilege, disclosure of attorney work-product to a third party may constitute a waiver of the privilege. Also, parties and counsel should anticipate that any materials provided to a testifying expert, including attorney work-product, may be discoverable.21
Given the expansive nature of discovery available under the Federal Rules, a party may be required to produce confidential business information. If a party is concerned that the documents requested contain competitive, confidential or sensitive information and that disclosure will be harmful to its business, the party can seek a protective order from the court.22 A protective order can take various forms. For example, a party may ask the court to strike or modify the document request so that it does not call for production of certain sensitive information. A party may also ask the court to limit the use and disclosure of the confidential information. The party seeking a protective order bears the burden of demonstrating the need for protection.23 This showing requires specific proof (not conclusory allegations) of the prejudice that will be suffered as a result of the disclosure of the sensitive information.24 Often parties will agree as to the need for a protective order and the procedures to be used for maintaining the confidentiality of sensitive documents produced in the case.
However, the entry of a protective order will not necessarily shield all sensitive documents from disclosure. In some cases, interested third parties (such as the media) may challenge the court's entry of a protective order. When a non-party seeks to lift or modify a protective order, the court must balance the parties' interests in privacy and the public's right to have access to judicial proceedings.25[Page47:]
C. The document production process in United States litigation
In this section we describe some of the mechanics of document requests and production in United States litigation as well as some of the important obligations of parties and counsel in connection with document retention and production.
There is a duty to preserve documents and electronically stored information once the holder of that information has a reasonable expectation that the documents and electronic records may be relevant to a potential or pending litigation.26 A party who fails to preserve and retain such documents may face sanctions or an adverse inference regarding the documents that were not retained.
Where there is a reasonable anticipation of litigation, a company should suspend its regular document retention and destruction policies and put in place what is commonly referred to as a 'litigation hold' to ensure the preservation of relevant records. This preservation mechanism would apply to all tangible documents and accessible electronic information as well as to back-up tapes that are actively used for information retrieval. Further, if a company can identify where documents of relevant employees to the dispute are stored on 'inaccessible' back-up tapes, the company may have a duty to preserve such tapes. Adhering to a regular document retention and destruction policy may protect a corporation from an adverse inference if relevant evidence is inadvertently destroyed under an existing policy and the corporation did not reasonably anticipate litigation.
The Federal Rules require that parties make certain initial disclosures at the beginning of the case before receiving a request for documents.27 The automatic disclosure provisions, set forth in Rule 26(a)(1), are designed to foster an early exchange of basic information relevant to the claims in a case. Under the initial disclosure provisions, parties must provide, 'without awaiting a discovery request', the following information: (a) the name, address and telephone number of each individual 'likely to have discoverable information that the disclosing party may use to support its claims or defenses', (b) a copy, or description by category and location, of 'all documents, data compilations or tangible things that are in the possession, custody or control of the party' and that the disclosing party may use to establish its claims or defenses; (c) a computation of requested damages and documentation upon which the calculation is based; and (d) any insurance agreement that may be liable to satisfy any part of the judgment entered in the pending case.28 These initial disclosures are made in accordance with a schedule established by the court early in the case.
All parties are under an obligation to make a reasonable investigation before producing documents under the automatic disclosure provisions. An attorney of record must sign the disclosures.29 The attorney's signature 'constitutes a certification that to the best of the signer's knowledge, information, and belief, formed after a reasonable inquiry, the disclosure is complete and correct as of the time it is made'.30 In connection with that inquiry, a certifying attorney should take steps to try to ensure that his or her clients comply with discovery requests and [Page48:] assist the client in its search for relevant materials. If a party fails to comply with its initial disclosure obligations, it is subject to possible sanctions under Rule 37(c), including an adverse inference based on its failure to have made the required disclosure, paying reasonable expenses (including attorney's fees) caused by the failure, or being precluded from using information at trial that should have been initially disclosed.31
Parties can serve requests for documents on other parties to the litigation soon after the case is filed.32 The procedure for requesting the production of documents from a party is governed by Rule 34. A party makes a written request for documents directly to the other party, without court intervention. A document request must set forth, 'either by individual item or by category', the items sought and describe them with 'reasonable particularity'.33 For example, a document request might seek 'all documents relating to the negotiations between the parties regarding their Agreement'. What constitutes 'reasonable particularity' depends on the facts and circumstances of each case.34 The document request must also specify a reasonable time, place, and manner for making the documents available.35
A party also can obtain documents from non-parties to the litigation through a subpoena for documents under Rule 45.36 A 'non-party witness is subject to the same scope of discovery under this rule as that person would be as a party to whom a request is addressed pursuant to Rule 34'.37
When served with a document request or subpoena for documents, the receiving person or company must 'serve a written response within 30 days after the service of the request' unless a different time period has been directed by the court or agreed to in writing by the parties.38 The written response must state with respect to each requested item whether the responding party will make it available or objects to its production. A responding party may object on multiple grounds and must identify all applicable grounds for objection in its written response. Failure to assert an objection to a requested item or category of documents can constitute a waiver of the objection, even as to items that may be privileged. The written response must be signed by an attorney of record, which constitutes a certification that to the best of the signer's knowledge, information, and belief, the representations in the response are warranted by existing law and have evidentiary support.39 A responding party must supplement its response if it subsequently learns that 'the response is in some material respect incomplete'.40
In addition to asserting applicable privileges, a party or non-party can assert a number of objections to a request for documents in its written responses. For example, if the request is unclear, the responding party can object on the ground that the request is vague and incomprehensible. A responding party can object to a request on the grounds that it is overly broad, unduly burdensome, unreasonably duplicative of other requests, or not calculated to lead to the discovery of admissible evidence. Because failure to assert an applicable objection constitutes a waiver, it is common practice for a responding party to assert an exhaustive list of objections in its written responses. [Page49:]
Parties are required to 'meet and confer' to resolve discovery disputes before presenting such disputes to a federal court for resolution.41 During the meet and confer process, parties often are able to narrow their differences and agree on certain categories of documents that will be produced and what disputes the court must resolve.
The document collection and review process in connection with litigation in the United States can be time-intensive and expensive. Counsel should review the document requests with the client's in-house attorneys and employees who will be involved in coordinating the document collection process. Counsel should also identify the types and locations of all potentially responsive documents and electronically stored information as well as the employees who are likely to posses potentially relevant materials. Often this involves interviewing a number of client employees. Counsel should also identify a contact person at the client who can explain the relevant electronic systems that must be examined for potentially responsive information.
Documents may be produced as they are kept in the normal course of business or organized and labeled to correspond to the categories of documents requested.42 As a practical matter, documents are rarely produced in labeled categories. Often parties negotiate a practical means for producing documents during the meet and confer process or thereafter.
If a party or non-party objects to producing certain documents and counsel are unable to resolve the objection during the meet and confer negotiations, the requesting party can raise the matter with the court by filing a motion to compel production under Rule 37. Courts expect the parties to resolve as many discovery disputes as possible before seeking judicial intervention.43 A motion to compel production of documents 'must include a certification that the movant has in good faith conferred or attempted to confer' with the opposing party.44
When a discovery dispute is heard by the court, the judge may order the losing party to pay the reasonable costs and legal fees of the prevailing party. The fee-shifting sanction is mandatory unless the losing party's actions were 'substantially justified' or imposing sanctions would be 'unjust'.45 For example, a court may decide not to impose sanctions on the party ordered to produce documents where the moving party did not make 'a good faith effort to obtain disclosure or discovery without court action'.46
A party who fails to comply with its discovery obligations may suffer serious consequences. Federal Rule 37 authorizes sanctions for improperly withholding discoverable information and encourages full and meaningful compliance with the discovery rules. When a party disregards an order to produce documents, it faces a range of possible sanctions. For instance, a federal court can order that certain factual [Page50:] matters be deemed established that are unfavorable to the party who failed to produce certain material. The court can also prohibit the sanctioned party from introducing certain matters into evidence, supporting a particular claim, or opposing a claim or defense of its adversary. The court can even strike the party's pleadings or dismiss the action. And the court can require the disobedient party-or the party's attorney-to pay the reasonable legal fees and expenses caused by the discovery dispute. In addition to or in lieu of such sanctions, a federal court can hold a party in contempt for failure to comply with a discovery order.47 Electronic discovery has increased the challenges of complying with discovery obligations and the exposure to sanctions for failure to do so.
Electronic discovery or e-discovery has had a substantial impact on United States litigation. Because the volume of electronically stored information can be substantially greater than hard-copy information, the costs and burdens associated with collecting and producing electronic data can be significant, sometimes even exceeding the amount in controversy in the underlying litigation. Electronically stored information may be altered or erased inadvertently, thereby imposing a burden on parties to take steps to prevent the loss of relevant information. In addition, there can be complex issues relating to the manner in which electronically stored information is produced so that it is intelligible to the requesting party.
As a result of the difficulties that arise with respect to the collection, preservation and production of electronically stored information, United States litigants and courts are facing several new issues. These include what constitutes an overbroad or unduly burdensome request for electronically stored information, when a requesting party should pay some or all of the costs involved in retrieving the electronic data, the extent of a party's duty to preserve electronically stored information, and when sanctions are appropriate for failure to preserve such information.48
The production of electronically stored information, like conventional documents, is governed by Rule 34, which includes in the definition of document 'other data compilations from which information can be obtained . . . through detection devices into reasonably usable form'. The scope of permissible discovery of electronically stored information, like other documents, is governed by Rule 26(b), and is subject to the proportionality considerations of 26(b)(2), which allows the court either to restrict unduly burdensome or expensive discovery or require the requesting party to bear some of the costs of production.
Federal courts consider a number of factors in deciding what electronically stored information a party must produce and whether cost-shifting is appropriate. First, courts determine whether the electronic information sought may be categorized as either 'accessible' or 'inaccessible' information. 'Accessible' information is live data that is immediately retrievable, such as information that is active online or near online. 'Inaccessible' information is not immediately retrievable, such as data stored on back-up tapes. Cost-shifting is only considered appropriate with respect to 'inaccessible' data. Second, with respect to the obligation to produce 'inaccessible information', courts consider whether it is reasonably likely that the 'inaccessible' data might contain relevant useful information. In some circumstances, courts may require a party to restore and produce a small representative sample of the 'inaccessible' data, such as a targeted selection of [Page51:] back-up tapes. Third, courts determine whether the burden and cost of producing 'inaccessible' data outweighs the potential value of production to the requesting party. In doing this, courts consider seven primary factors: (1) the extent to which the request is specifically tailored to discover relevant information; (2) the availability of such information from other sources; (3) the total cost of production, compared to the amount in controversy; (4) the total cost of production, compared to the resources available to each party; (5) the relative ability of each party to control costs and its incentive to do so; (6) the importance of the issues at stake in the litigation; and (7) the relative benefits to the parties of obtaining the information.49 In the event that a court requires the requesting party to bear some or all of the producing party's production costs, those costs are limited to the costs of restoration, not production. Once data has been restored it becomes 'accessible' and should be treated like other discoverable information.50
On 12 April 2006, the United States Supreme Court approved a set of amendments to the Federal Rules of Civil Procedure relating to electronically stored information that are scheduled to take effect in December 2006 (the '2006 Amendments'). The 2006 Amendments clarify that electronically stored information is discoverable and address some problematic issues relating to the distinction between 'accessible' and 'inaccessible' electronically stored records, sanctions resulting from spoliation of electronic information, and inadvertent waiver of privilege with respect to electronic data.51
Rule 26(a) will be amended to replace the phrase 'data compilations' with 'electronically stored information' to alert parties of the obligation to include electronically stored records as part of their initial discovery disclosures. Similarly, Rule 34 will be modified to add 'electronically stored information' to the description of 'documents' and Rule 45 will be amended to recognize that electronically stored information can be sought from a non-party.52
The 2006 Amendments anticipate that the challenges associated with electronic document production may result in the inadvertent production of privileged documents. Rule 26(b)(5) will be amended to provide a limited mechanism for a producing party to assert privilege with respect to electronic documents that have already accidentally been produced to an adversary.53 Similarly, Rule 45(d)(2) will be amended to add a procedure for asserting privileges or protections with respect to electronic documents accidentally produced by a non-party.54 In addition, Rule 26(f) will be amended to provide that at the pre-trial discovery conference the parties and the court address approaches to asserting privilege following inadvertent disclosures.
Rule 26(b)(2), which establishes the scope of discoverable information, will be amended to draw a distinction between information that is and is not 'reasonably accessible'. As amended, Rule 26(b) will not require a party to produce electronically stored information that is not reasonably accessible because of undue burden or cost. Instead, the amended provision will require a responding party to identify the sources of potentially responsive electronic information that have not been searched on the basis of burden or cost.
Finally, Rule 37 will be amended with regard to permissible sanctions for spoliation of electronic evidence. As amended, sanctions will be inappropriate under Rule 37 where a party has lost electronically stored information as a result of a routine destruction operation of an electronic storage system, as long as the operation of the system is conducted in good faith. [Page52:]
The impact of e-discovery in the United States is only beginning to be felt. One consequence is an increase in the cost of litigation. E-discovery can be one of the single most expensive and burdensome aspects of litigation in United States courts.55 The technological complexities of e-discovery have generated a new industry of 'e-discovery attorneys' as well as e-discovery consultants and technical engineers.56 All of this is increasing the cost and complexity of litigating in the United States.
D. Practical impact of discovery on litigation in the United States
Expansive document discovery is part of the litigation process in the United States. The obligation to preserve potentially relevant documents and electronic data once a potential dispute arises requires parties and counsel to address document preservation and collection issues as soon as there is a reasonable likelihood of litigation. Document collection can require an enormous amount of time from client representatives as well as outside counsel. The process of producing documents in a United States litigation can take months or years to complete. Where there are discovery disputes-and there often are-the resulting motion practice adds to the time and cost of litigation. As a result, the pre-trial document discovery process has become a significant component of the overall cost of United States litigation.
When properly used, the document discovery process enables the parties to narrow and clarify the issues in dispute and provides them with full knowledge of the facts before trial. Sometimes the results of this process lead to pre-trial settlement. But because of the broad scope of discovery-encompassing anything relevant to a claim or defense of any party-document discovery often requires the collection and production of a mass of material that is of marginal relevance to the case. Judicial supervision is necessary to deal with the disputes that regularly arise from this process and to prevent the process from being used to impose unnecessary burdens and costs on a party.
II. Document production in international arbitrations in the United States
Document production has become a regular component of international arbitration in the United States. Arbitrators, counsel and parties in arbitrations in the United States increasingly face the same types of discovery issues and disputes as do judges, counsel and parties in United States litigation. They also face the challenge of defining the nature and extent of the document production process in the international context.
A. Is there a right to document production in arbitration conducted in the United States?
Often counsel presumes that there is a right to obtain documents in an international arbitration in the United States. Arbitral practice in the United States confirms that there is a basis to expect that documents can be requested and obtained. But what is the source of this 'right' to documents in United States arbitration? [Page53:]
Procedural rights in international arbitration generally arise from the parties' arbitration clause, the arbitration rules chosen by the parties and the legal framework that governs the arbitration. Although most international arbitration clauses are silent regarding document discovery, some United States counsel and parties expressly provide for discovery in their arbitration clause and some even specify discovery in accordance with the Federal Rules of Civil Procedure.
The ICC Rules of Arbitration in force from 1 January 1998 (the 'ICC Rules') do not expressly address document production. An ICC tribunal has the general mandate to 'proceed within as short a time as possible to establish the facts of the case by all appropriate means'.57 One of those means can include document production by the parties. The arbitral tribunal also has considerable flexibility in conducting the proceeding, which includes determining the scope and manner of document production.58 This power must be exercised fairly and impartially so as to 'ensure that each party has a reasonable opportunity to present its case'.59 At any time during the proceedings, an arbitral tribunal may direct any party 'to provide additional evidence'.60 The ICC Rules permit parties to request documents and provide the tribunal with the power to order production.
In addition, parties may incorporate the IBA Rules on the Taking of Evidence in International Arbitration ('IBA Rules') in their arbitration clause. Even when the IBA Rules are not referenced in the arbitration clause, tribunals often look to the IBA Rules as reflective of international arbitration practice. In either situation, the IBA Rules expressly recognize a party's right to request documents that are 'relevant and material to the outcome of the case'.61
The legal framework governing international arbitration in the United States also supports the existence of a right to document production. First, the Federal Arbitration Act (the 'FAA')62 provides arbitrators with the power to subpoena witnesses to testify at the hearing and require that they bring documents 'deemed material as evidence in the case'.63 Second, an award rendered in the United States may be judicially set aside or vacated based on the grounds set forth in Section 10 of the FAA. One of those grounds is where the arbitrators have engaged in any 'misbehavior by which the rights of any party have been prejudiced'.64 Arbitrators are sensitive to the potential argument that an award should be vacated under Section 10 based on the tribunal's failure to order the production of documents material to the case.65
As a result, the issue in international arbitration in the United States is not whether there will be document production, but how much document production will be required.
B. Factors impacting the extent of document discovery in arbitration
The participants in an international arbitration-the parties, counsel and arbitrators-determine the extent of document discovery in each case. United States parties often bring their experiences from United States litigation to an international arbitration, including their expectation of broad document production. Where counsel for one or more of the parties is experienced in United States litigation, it is likely that such counsel will seek document discovery. Similarly, United States arbitrators may be more receptive to requests for document production. The nationality as well as the legal training and experience of the [Page54:] participants in an international arbitration may have a significant impact on the extent of document production in the case.
C. Document production practices in international arbitrations in the United States
International arbitration in the United States often reflects the document production process in United States litigation. It is common for parties to seek documents, assert objections, attempt to resolve differences and ultimately submit disputes to the tribunal for resolution. Arbitrators increasingly must devote substantial time to resolving the scope of appropriate discovery of hard copy and electronically stored information in the context of factually complex disputes.
Parties often serve broad document requests early in the arbitration seeking 'all documents' relating to matters relevant to the claims and defenses in the case. Although the IBA Rules provide that parties may seek specific documents or 'narrow and specific' categories of documents,66 document requests in the United States are often broad and focus on categories of documents as opposed to specific documents.
A document request is usually met by a response that identifies numerous objections to production, including any issues of privilege.67 This sets the stage for the process by which parties attempt to narrow or resolve their differences.
It is common for the parties to 'meet and confer' regarding document disputes in an international arbitration. If counsel does not initiate this process after document requests and responses are exchanged, the arbitral tribunal may require the parties to try to resolve as many document disputes as possible before submitting disputes to the tribunal for determination. During the meet and confer process, counsel can address any concerns about the confidential treatment of sensitive commercial information or trade secrets and negotiate a proposed protective order to govern some or all of the documents to be produced in the case. If counsel cannot reach substantial agreement on the terms of a proposed protective order, the arbitral tribunal can resolve that issue along with the other discovery disputes.68
Document disputes that counsel are unable to resolve are submitted to the tribunal for resolution. The written submissions relating to document disputes can take different forms. Where the tribunal does not specify a procedure, counsel may file submissions that look like motions to compel discovery under the Federal Rules. Where the tribunal specifies a format, the papers may look very different from federal court motion papers. For example, an arbitral tribunal may require the parties to present their document disputes in a joint schedule or chart that identifies the disputed document requests and summarizes the parties' positions regarding the disputed document requests.[Page55:]
Document requests in United States arbitrations generate objections and discovery disputes. Most of these disputes relate to the scope of the requests, including the extent to which the requests seek electronically stored information. These are often factually complex issues. Determining whether the requested documents are 'relevant' or 'material' to a claim or defense or to the outcome of the case requires an understanding of the respective parties' positions. Evaluating the burdens and benefits of electronic discovery can be difficult.69 Electronic discovery also may disproportionately impact one of the parties to a case. It is important that arbitrators resolve these issues promptly so that they do not delay the timetable of the case. It is equally important that arbitrators invest the time necessary to understand the context of these discovery disputes and the potential burden on the producing party. How a tribunal resolves document disputes can have a substantial effect on the timetable and cost of the arbitration.
Arbitrators increasingly are being asked to do what United States courts do routinely-supervise the discovery process and resolve the disputes that arise from it. As a result, arbitrators must not only schedule time for hearing the evidence in the case, but also must build in time to resolve fact-intensive discovery disputes. From the perspective of parties and their counsel, document discovery issues and how they are resolved have a significant impact on the efficiency and effectiveness of an international arbitration.
Document production in arbitration is also available from non-parties in the United States. Section 7 of the FAA permits arbitrators to issue subpoenas and authorizes federal courts to enforce arbitral subpoenas.70 Section 7 provides that arbitrators 'may summon in writing any person to attend before them or any of them as a witness and in a proper case to bring with him or them any book, record, document or paper which may be deemed material as evidence in the case'.71 It is generally accepted that Section 7 permits arbitrators to summon nonparties who are within the subpoena power of the federal court where the arbitration is being held to appear at the arbitration hearing and produce documents when they appear.72
However, federal courts have expressed differing views as to whether Section 7 of the FAA implicitly permits production of documents from a non-party prior to the hearing as opposed to at the hearing itself. Some courts have concluded that Section 7 of the FAA grants a court the power to enforce an arbitral subpoena directing a non-party to produce documents as part of the pre-hearing discovery process. Such courts have focused on whether enforcing the subpoena for pre-hearing document production will increase or detract from the efficiency of arbitral proceedings, whether the subpoenaed third party is 'sufficiently related' to the dispute, and whether the party requesting the pre-hearing production has [Page56:] demonstrated a 'special need or hardship'.73 Other courts have construed the statutory language more narrowly, concluding that the language in the statute that authorizes an arbitrator to issue a subpoena requiring a person 'to bring' items 'with him' limits an arbitrator's power to situations where the non-party has been called to appear in the physical presence of the arbitral tribunal and to hand over the documents at that time.74 Tribunals need to be sensitive to this developing area of United States law as well as the burdens that may be imposed by subpoenas directed to non-parties.
D. The meaning of document production in international arbitration in the United States
While document production in international arbitration in the United States may appear to reflect litigation practice in United States courts, there is an important difference. Document discovery is a basic right in federal litigation in the United States. This right is reflected in detailed procedures set forth in the Federal Rules that impose obligations on both counsel and parties. Federal courts have generated a body of case law that explains the obligations of counsel and parties in the discovery process and the consequences that can follow from disregarding those obligations. As a result, attorneys practicing in the federal courts share a basic understanding of what the obligation to produce documents means in a United States lawsuit.
By contrast, there may not be a shared understanding of what document production means in an international arbitration in the United States. Counsel, parties and arbitrators in international arbitrations in the United States may come from different legal traditions, some of which recognize the right to document discovery while others may not or may view document production as a more limited process. Where there is no shared understanding of the meaning and obligations of document production, the process can lead to disputes as well as differing approaches to production. This creates the possibility that one party may search for and produce documents while the other only selectively engages in the process. For the document production process to be fair, arbitrators, counsel and parties need to be sure that they all understand what document production means in their case and what their respective obligations are in that process.
Conclusion
The document production process that is central to United States litigation has become a part of international arbitration in the United States. It is common for the parties to request and produce documents and to submit document disputes to the arbitral tribunal for resolution. Many of the document disputes in international arbitrations are the same as in litigation: disputes over the scope of document production, the applicability of document requests to electronically stored information, and whether documents are privileged from production.
However, for the document process to be fair, all the participants in an international arbitration need to understand the meaning of document production and their respective obligations in complying with that process as well as the consequences of failing to do so. The arbitral tribunal has a special role in defining and supervising the process so that document production contributes to the fair and efficient resolution of the case and does not become the single most expensive and time-consuming aspect of the arbitration.
1 The authors are grateful for the valuable research and assistance provided by Brian A. de Haan in preparing this article.
2 For a comprehensive discussion of US discovery practices in federal courts, see Chapter 19, entitled 'Discovery Strategy and Privileges', and Chapter 21, entitled 'Document Discovery', in R.L. Haig, ed., Business and Commercial Litigation in Federal Courts, 2d ed. (Thomson West, 2005).
3 Hickman v. Taylor, 329 U.S. 495, 501 (1947).
4 United States v. Proctor & Gamble Co., 356 U.S. 677, 682 (1958).
5 See Rule 26(b)(1); Rule 34(a).
6 See Rule 34(c) ('A person not a party to the action may be compelled to produce documents and things … as provided in Rule 45.'); see also Rule 45.
7 See Advisory Committee Notes to the 1991 Amendments to Rule 45(a) of the Federal Rules of Civil Procedure ('The non-party witness is subject to the same scope of discovery under this rule as that person would be as a party to whom a request is addressed pursuant to Rule 34.').
8 Rule 26(b)(1).
9 Ibid.
10 See Rule 26(b)(2) (a court may limit discovery if it determines that 'the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome or less expensive' or 'the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues').
11 See Rule 34(a).
12 See e.g. Wiginton v. CB Richard Ellis, 229 F.R.D. 568, 572 (N.D. Ill. 2004) ('Electronic data, such as e-mails, are discoverable.'); Thompson v. U.S. Dept. of Housing and Urban Dev't., 219 F.R.D. 93, 97 (D. Md. 2003) (computer files, including emails, are discoverable).
13 See Rule 34 (permitting a request for documents and things 'which are in the possession, custody or control of the party upon whom the request is served').
14 See Mercy Catholic Med. Ctr. v. Thompson, 380 F.3d 142, 160 (3d Cir. 2004) ('In the context of Fed. R. Civ. P. 34(a), so long as the party has the legal right or ability to obtain the documents from another source upon demand, that party is deemed to have control.'); Alexander v. F.B.I., 194 F.R.D. 299, 301 (D.D.C. 2000) ('control' is defined not as possession, but as the legal right to obtain documents on demand).
15 See Riddell Sports, Inc. v. Brooks, 158 F.R.D. 555, 558-59 (S.D.N.Y. 1994) (requiring a corporation to produce recordings created by an officer of the corporation).
16 See Hunter Douglas, Inc. v. Comfortex Corp., Civil Action No. M8-85, 1999 WL 14007, at *3 (S.D.N.Y. Jan. 11, 1999) ('If the nature of the relationship between the parent and its affiliate is such that the affiliate can obtain documents from its foreign parent to assist itself in litigation, it must produce them for discovery purposes.'); Addamax Corp. v. Open Software Foundation, Inc., 148 F.R.D. 462, 467 (D. Mass. 1993) (subsidiary required to produce documents in possession of parent); Camden Iron and Metal Inc. v. Marubeni American Corp., 138 F.R.D. 438, 441-44 (D.N.J. 1991) (parent required to produce documents obtained by subsidiary from parent in the normal course of business).
17 See Rule 26(b)(5) ('When a party withholds information otherwise discoverable under these rules by claiming that it is privileged or subject to protection as trial preparation material, the party shall make the claim expressly and shall describe the nature of the documents, communication, or things not produced or disclosed in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the applicability of the privilege or protection.').
18 See generally Upjohn Co. v. United States, 449 U.S. 383 (1981) (discussing the scope and applicability of the attorney-client and work-product privileges generally).
19 Rule 26(b)(3).
20 Ibid.
21 See Reg'l Airport Auth. of Louisville v. LFG, LLC, - F.3d -, Case No. 05-5754, 2006 WL 2368323, at *14-16 (6th Cir. Aug. 17, 2006) ('[W]e now join the overwhelming majority of courts in holding that Rule 26 creates a bright-line rule mandating disclosure of all documents, including attorney opinion work product, given to testifying experts.') (internal citations and quotations omitted); In re Pioneer Hi-Bred Int'l, Inc., 238 F.3d 1370, 1375 (Fed. Cir. 2001); Fidelity Nat'l Title Ins. Co. of N.Y. v. Intercounty Nat'l Title Ins. Co., 412 F.3d 745, 751 (7th Cir. 2005). But see Haworth, Inc. v. Herman Miller, Inc., 162 F.R.D. 289, 292-96 (W.D. Mich. 1995) (attorney work-product is not discoverable merely because it was shared with a testifying expert); Smith v. Transducer Tech., Inc., 197 F.R.D. 260, 261-62 (D.V.I. 2000) (same); Krisa v. Equitable Life Assurance Soc'y, 196 F.R.D. 254, 259-61 (M.D. Pa. 2000) (same); Estate of Moore v. R.J. Reynolds Tobacco Co., 194 F.R.D. 659, 663-64 (S.D. Iowa 2000) (same).
22 See Rule 26(c)(7) (the court can order that 'a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a designated way').
23 Rule 26(c) (requiring 'good cause shown' by the party moving for a protective order).
24 See Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1121 (3d Cir. 1986) ('Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning, do not satisfy the Rule 26(c) test.'); Viada v. Osaka Health Spa, Inc., 04 Civ. 2744, 2006 U.S. Dist. LEXIS 9678, at *7 (S.D.N.Y. Mar. 8, 2006) ('In order for a party to establish good cause for a protective order . . . courts require that a particular and specific demonstration of fact [be made], as distinguished from stereotyped and conclusory statements.'); Jackson v. Chubb Corp., 193 F.R.D. 216, 219 (D.N.J. 2000) (Rule 26(c) requires a party to show good cause for an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.); Havens v. Metropolitan Life Ins. Co. (In re Akron Beacon Journal), 94 Civ. 1402, 1995 WL 234710, at *10 (S.D.N.Y. 1995) ('The moving party must show an adequate reason, by a 'particular and specific demonstration of fact as distinguished from stereotyped and conclusory statements.').
25 See Pansy v. Borough of Stroudsburg, 23 F.3d 772, 786 (3d Cir. 1994) ('Protective orders . . . raise . . . public policy concerns. All such orders are intended to offer litigants a measure of privacy, while balancing against this privacy interest the public's right to obtain information concerning judicial proceedings.').
26 See Anderson v. Sotheby's Inc., 04 Civ. 8180, 2005 WL 2583715, at *3 (S.D.N.Y. Oct. 11, 2005) ('A duty to preserve evidence arises when the party in possession of the evidence is notified of its relevance.'); Turner v. Hudson Transit Lines, Inc., 142 F.R.D. 68, 73 (S.D.N.Y. 1991) ('the obligation to preserve evidence even arises prior to the filing of a complaint where a party is on notice that litigation is likely to be commenced').
27 See Rule 26(a)(1).
28 Rule 26(a)(1)(A)-(D).
29 See Rule 26(g)(1).
30 Ibid.
31 See Rule 37(c).
32 See Rule 26(d).
33 Rule 34(b).
34 See In re Amer. Motor Club, Inc., 129 B.R. 981, 988 (E.D.N.Y. 1991) ('The reasonable particularity requirement under this rule, providing that production of documents must describe items to be produced with reasonable particularity, is not susceptible to exact definition; what is reasonably particular is dependant upon facts and circumstances in each case.'); Westhemeco, Ltd. v. New Hampshire Ins. Co., 82 F.R.D. 702, 709 (S.D.N.Y. 1979) (reasonable particularity requirement varies according to the facts and circumstances of each case).
35 Rule 34(b).
36 See Rule 45.
37 Advisory Committee Notes to the 1991 amendments regarding Rule 45.
38 See Rule 34(b).
39 See Rule 26(g)(2); Rule 11(b).
40 Rule 26(e).
41 See Rule 37(a)(2).
42 See Rule 34(b).
43 See e.g. In re Convergent Techs. Sec. Litig., 108 F.R.D. 328, 330 (N.D. Cal. 1985) (court viewed the discovery dispute as 'a major breakdown in what is supposed to be a self-executing system of pretrial discovery').
44 See Rule 37(a)(2)(A) and (B).
45 See Rule 37(a)(4)(A).
46 Ibid.
47 See Rule 37(b)(1)(A)-(D).
48 See 'The Sedona Principles: Best Practices Recommendations & Principles for Addressing Electronic Document Production', The Sedona Conference Working Group Series July 2005 (recognizing that electronic discovery poses problems that 'vex corporations, litigants and courts alike' and providing guidelines for handling ediscovery issues).
49 Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003); see also Advisory Committee Notes to the 2006 Amendments regarding Rule 26(b)(2) (listing these seven factors).
50 Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, 290 (S.D.N.Y. 2003) ('However, the responding party should always bear the cost of reviewing and producing electronic data once it has been converted to an accessible form.').
51 See Advisory Committee Notes to the 2006 Amendments regarding Rules 26, 34 and 45.
52 See Advisory Committee Notes to the 2006 Amendments regarding Rule 45.
53 See Advisory Committee Notes to the 2006 Amendments regarding Rule 26.
54 See Advisory Committee Notes to the 2006 Amendments regarding Rule 45.
55 See e.g. Lockheed Martin Idaho Techs. Co. v. Lockheed Martin Adv. Environmental Sys., Inc., Case No. 98-316, 2006 WL 2095876, at *2 (D. Idaho Jul. 27, 2006) (court awarded the prevailing party US$ 4.6 million in costs for litigation database creation, stating 'litigation database was necessary due to the extreme complexity of this case and the millions of documents that had to be organized').
56 See e.g. S. Davis, 'New Practice Area May Be Emerging' National Law Journal (17 July 2006) ('There's a new technology boom of sorts. In the last few months legal recruiters have noted a surge of interest from organizations seeking electronic-discovery managers, e-discovery consultants, e-discovery engineers, e-discovery gurus, e-discovery and document-retention specialists and, finally, attorneys who understand e-discovery.')
57 ICC Rules, Article 20(1).
58 Where the ICC Rules are silent, the Arbitral Tribunal can apply 'any rules which the parties, or failing them, the Arbitral Tribunal may settle on, whether or not reference is thereby made to the rule of procedure of a national law to be applied to the arbitration'. ICC Rules, Article 15(1).
59 ICC Rules, Article 15(2).
60 ICC Rules, Article 20(5).
61 IBA Rules, Article 3(3)(b).
62 9 U.S.C.A. § 1 et seq.
63 9 U.S.C.A. § 7.
64 9 U.S.C.A. § 10(a)(3).
65 See Postlewaite v. McGraw-Hill, Inc., 98 Civ. 0611, 1998 WL 751687, at *4 (S.D.N.Y. Oct. 28, 1998) ('Arbitrators have an affirmative duty to insure that relevant documentary evidence in the hands of one party is fully and timely made available to the other side before the hearing is closed.'); Chevron Transp. Corp. v. Astro Vencedor Compania Naviera, S.A., 300 F. Supp 179, 181 (S.D.N.Y. 1969) ('The absence of statutory provision for discovery techniques in arbitration proceedings obviously does not negate the affirmative duty of arbitrators to insure that relevant documentary evidence in the hands of one party is fully and timely made available to the other side before the hearing is closed.').
66 See IBA Rules, Article 3(3)(a).
67 See IBA Rules, Article 9(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 or materiality; (b) legal impediment or privilege . . .; (c) unreasonable burden to produce the requested evidence; (d) loss or destruction . . .; (e) grounds of commercial or technical confidentiality . . .; (f) grounds of special political or institutional sensitivity . . .; or (g) considerations of fairness or equality of the Parties . . .').
68 See ICC Rules, Article 20(7) ('The Arbitral Tribunal may take measures for protecting trade secrets and confidential information.').
69 The complex issues presented by disputes involving the appropriate scope of electronic discovery, the burdens associated with it, and cost-shifting are reflected in the United States case law, the 2005 Sedona Principles and the 2006 Amendments to the Federal Rules.
70 See 9 U.S.C. § 7.
71 Ibid.
72 See Dynegy Midstream Servs. v. Trammochem, 451 F.3d 89, 94-95 (2d Cir. 2005).
73 See In re Security Life Ins. Co. of America, 228 F.3d 865, 870-71 (8th Cir. 2000) (considering the interest in preserving the efficiency of arbitral proceedings and the relatedness of the subpoenaed third party to the dispute); see also Meadows Indem. Co. v. Nutmeg Ins. Co., 157 F.R.D. 42, 45 (M.D. Tenn. 1993) (recognizing that non-party production of documents prior to the hearing could be compelled where the non-party was 'intricately related to the parties involved in the arbitration and [] not mere third-parties who have been pulled into th[e] matter arbitrarily. Stanton v. Paine Webber Jackson & Curtis, Inc., 685 F. Supp 1241 (S.D. Fla. 1988) ('under the Arbitration Act, the arbitrators may order and conduct such discovery as they find necessary;' rejecting as 'unfounded' the contention that Section 7 of the FAA only permits the arbitrators to compel witnesses at the hearing and prohibits pre-hearing appearances); In re Arbitration between Douglas Brazell v. Amer. Color Graphics, Inc., Case No. M-82 AGS, 2000 WL 364997 (S.D.N.Y. Apr. 7, 2000) (Section 7 gives 'broad authority to arbitrators in terms of discovery' and authorizes arbitrators to 'provide for pre-hearing production of documents from third parties'.); Comsat Corp. v. Nat'l Science Foundation,190 F.3d 269, 276 (4th Cir. 1999) (applying 'special need or hardship' test; 'a party might, under unusual circumstances, petition the district court to compel pre-arbitration discovery upon a showing of special need or hardship').
74 See Hay Group, Inc. v. E.B.S. Acquisition Corp., 360 F.3d 404, 406-07 (3d Cir. 2004) (rejecting both the 'integrally related' and 'special need' tests of the Eighth and Fourth Circuits, holding instead that a strict textual reading of Section 7 does not give a court the power to enforce arbitral subpoenas for the pre-hearing production of documents; 'a court's policy preferences cannot override the clear meaning of the statute's text . . . Section 7's language unambiguously restricts an arbitrator's subpoena power to situations in which the non-party has been called to appear in the physical presence of the arbitrator and to hand over the documents at that time.'); Odjfell ASA v. Celanese AG, 328 F. Supp. 2d 505 (S.D.N.Y. 2004) (disregarding previous precedent in the Southern District and following Hay Group, the court refused to enforce the subpoena, stating that the words of the statute 'strongly suggests that the power refers only to an evidentiary hearing before the arbitrators'); see also Stolt-Nielsen Transp. Group, Inc. v. Celanese AG, 430 F.3d 567, 571 (2d Cir. 2005) (affirming district court's order enforcing non-party subpoenas, noting that the non-parties were specifically called to give testimony before the tribunal and that 'arbitrators issuing subpoenas and district courts asked to enforce them can, and should, take steps to minimize the burden on non-party witnesses').