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Copyright © International Chamber of Commerce (ICC). All rights reserved.
( Source of the document: ICC Digital Library )
International arbitration is often touted as a dispute resolution method independent of the legal procedural inclinations of any particular jurisdiction and is therefore broadly accessible and acceptable. Efficiency and fairness are considered key attributes, yet the demands of each may at times be in opposition. Arbitration process designers may choose aspects of different legal systems, approaches and methodologies to select what they believe will be the most useful dispute resolution process for particular circumstances.
Given that civil law and common law are the two primary legal traditions and given their highly divergent approaches to organizing and conducting hearings, how does one ensure that the efficient process being designed maintains procedural safeguards necessary to achieve fairness and yet be broadly acceptable? How do arbitrators and counsel arrive at a process that offers neither too much nor too little procedural guidance? How does one find the best balance of hearing procedure supported by proper documentation and appropriate levels of information exchange? This is a complicated balancing act at the interface of the different legal systems. The likelihood is that, in an international arbitration, parties from different jurisdictions will not instinctively share expectations on the conduct and the organization of the arbitration. Failing balance of process, trust will be the casualty.
Fundamentally, the interface of the two legal systems creates polarities, as civil law represents what may be considered a centralized procedure and common law a more decentralized procedure.
Case initiation highlights the polarity. Civil law procedure presumes 'front-loaded' case submission based on documents in possession of the party making the submission. The counter-party follows suit. The judge or arbitrator largely directs further, typically limited, documentation. This contrasts sharply with common law procedure where initial case filing sets forth the premise of the case to be presented and then mutual information exchange between the parties ensues. This discovery [Page296:] process may include document requests, sometimes quite broad, depositions and interrogatories, and may also bring to bear issues of e-discovery, the search for information stored on electronic media.
A particular source of friction at this stage of the proceedings is the existence of contrary principles of ethics with regard to privilege. Whereas corporate counsel in common law proceedings are presumed to have privacy of legal communication, civil law corporate counsel do not necessarily have the benefit of that presumption. In civil law proceedings this may not be a significant problem where there is very limited discovery. But when faced with a common law style demand for corporate in-house documents, confusion about obligation arises. Common law counsel presume privilege in this circumstance; civil law counsel may not.
Additionally, the ethical responsibility of counsel in a common law setting is generally to divulge information requested by an adversary. The same situation in a civil law setting generates an ethical breach, as civil counsel are barred from divulging information harmful to the client. Clearly, the intersection of common and civil law practices creates not only procedural confusions but a potential ethical dilemma as well. It is in these two areas - discovery and privilege - that the great potential for procedural discord exists and has driven much handwringing about the 'americanization' of international arbitration.2
Further, procedural differences are evident with the hearing. The judge or arbitrator grounded in the civil law system directs the case in terms of format, timing and presentation, with counsel acting in an ancillary role. Whereas common law judges and arbitrators serve primarily as referees of procedure, ensuring proper adherence to rules of presentation, party counsel largely determine the timing and format of the case presentation. The traditional civil law hearing tends to be brief, a day or two for the largest cases. Common law hearings may take days, or weeks, or even months in the largest cases.
There are further indicia of the dichotomy between civil and common law approaches. Witnesses are key to most common law proceedings. Not so with civil law proceedings, where the calling of witnesses may even be discouraged, particularly with regard to fact witnesses. In the words of one civil law judge, 'fact witnesses are not of much value as it is presumed that witnesses lie'. Expert witnesses may be used, but even then expert witnesses in civil law cases often focus their testimony on law, contract interpretation and the code. Common lawyers typically depend more heavily on fact witnesses, as well as expert witnesses, for interpretation of the facts of the case. Law and contract terms are [Page297:] clearly significant to the interpretation of the facts, but it is facts that are foundational to common law decisions, whereas application of the code is foundational to civil law decision-making.
To bring procedural clarity to international arbitration, the International Bar Association (IBA) promulgated its Rules on the Taking of Evidence in International Arbitration. While an important contribution to the practice of international arbitration, these Rules have not quelled concerns over the best procedural balance between the systems, in particular in relation to the americanization of international arbitration through the use of methods of discovery.
The International Centre for Dispute Resolution (ICDR) - the international arm of the American Arbitration Association (AAA) - published Guidelines for Arbitrators Concerning Exchanges of Information, effective as of 1 June 2008. The Guidelines' aims were to enhance the efficiency of arbitration by discouraging excessive document production, and to provide guidance to arbitrators and counsel on the preparation of cases. They adopted two means of achieving those aims: first, they imposed an affirmative mandate on arbitrators to manage cases in the direction of economy and efficiency, with very specific guidance on how to do so; and second, they mapped a path between common and civil law practices designed to be comfortable for parties and lawyers from both traditions while reining in some of the extremes of both.
The Guidelines were intended to be applied to international arbitration cases and sought in particular to offer a balance in matters that bring together divergent legal traditions occur. The Guidelines were formally included in the ICDR International Arbitration Rules on 1 June 2014. The Guidelines, and subsequent Rules, were the brainchild of a drafting committee composed of John Townsend, James Carter, Rusty Park, William Slate, Richard Naimark and, most importantly in the present context, John Beechey.
John Beechey was then a member of the AAA Executive Committee and an active practitioner and arbitrator, so he saw the problems relating to undefined discovery obligations in the initial stages of their development, around 2007. He was eloquent about the international impact that guidelines or rules restraining discovery practices would have if they came from an institution rooted in the American common law tradition.
At the time, it was traditional for arbitral rules to leave the supervision of discovery and exchange of information almost entirely to the discretion of the arbitrators, and this continues more or less to be the case. John realized that this tradition was not providing sufficient guidance to arbitrators, especially as e-discovery emerged on the scene, and that they needed the backing of a firm mandate to rein it in. Various approaches could have been taken to deal with the issue, the principal choices being either some general, categorical description of document production limits that would be narrower than the concepts [Page298:] underlying US rules, namely what is relevant and material (plus explicit exclusion, normally, of depositions, interrogatories and requests to admit) or, alternatively, an approach that keeps the broad conceptual boundaries of possible relevance and materiality but limits the number of paper and electronic files searched (by number of custodians, for instance) and tries to force the parties to agree on search terms, as is now the practice of the US federal courts. John pushed the AAA Board and the drafting committee in the former direction, which then and now seems wise. Arbitrators are not in a position to force the parties to cooperate to organize search terms early in a case (whether courts and magistrates are, either, is a good question). The result is that arbitrators still must rule on document production disputes with somewhat limited knowledge of the case, hence the value of the Guidelines.
The decision was taken to issue the Guidelines as a supplement to the Rules. Established arbitral institutions tend to be cautious about frequent changes to rules that parties have learned to rely upon. With the Guidelines there was also the feeling that they were a bold step where some testing was in order before carrying the full force of rules. With the omnibus revision of the ICDR Rules in June of 2014, the Guidelines were incorporated into the Rules, with virtually no changes, which is testament to their initial conception and construction. Further, once fully in use as Rules, they received fine reviews from counsel and arbitrators while, as Guidelines, there seemed to be some tentativeness in their application from time to time.
Provisions of the Guidelines when implemented as formal Rules appear in Articles 21 and 22 of the ICDR International Arbitration Rules. Article 21 extensively covers exchanges of information, while Article 22 provides clear guidance on the difficult issue of privilege.
Article 21: Exchange of Information
1. The arbitral tribunal shall manage the exchange of information between the parties with a view to maintaining efficiency and economy. The tribunal and the parties should endeavor to avoid unnecessary delay and expense while at the same time avoiding surprise, assuring equality of treatment, and safeguarding each party's opportunity to present its claims and defenses fairly.
2. The parties may provide the tribunal with their views on the appropriate level of information exchange for each case, but the tribunal retains final authority. To the extent that the parties wish to depart from this Article, they may do so only by written agreement and in consultation with the tribunal.
3. The parties shall exchange all documents upon which each intends to rely on a schedule set by the tribunal.
4. The tribunal may, upon application, require a party to make available to another party documents in that party's possession not otherwise available to the party seeking the documents, that are reasonably believed to exist and to be relevant and material to the outcome of the case. Requests for documents shall contain a description of specific documents or classes of documents, along with an explanation of their relevance and materiality to the outcome of the case.
5. The tribunal may condition any exchange of information subject to claims of commercial or technical confidentiality on appropriate measures to protect such confidentiality.
6. When documents to be exchanged are maintained in electronic form, the party in possession of such documents may make them available in the form (which may be paper copies) most convenient and economical for it, unless the tribunal determines, on application, that there is a compelling need for access to the documents in a different form. 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.
7. The tribunal may, on application, require a party to permit inspection on reasonable notice of relevant premises or objects.
8. In resolving any dispute about pre-hearing exchanges of information, the tribunal shall require a requesting party to justify the time and expense that its request may involve and may condition granting such a request on the payment of part or all of the cost by the party seeking the information. The tribunal may also allocate the costs of providing information among the parties, either in an interim order or in an award.
9. In the event a 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.
10. Depositions, interrogatories, and requests to admit as developed for use in U.S. court procedures generally are not appropriate procedures for obtaining information in an arbitration under these Rules.
Article 22: Privilege
The arbitral tribunal shall take into account applicable principles of privilege, such as those involving the confidentiality of communications between a lawyer and client. When the parties, their counsel, or their documents would be subject under applicable law to different rules, the tribunal should, to the extent possible, apply the same rule to all parties, giving preference to the rule that provides the highest level of protection.
In making the contribution he did, John proved to be an international leader in harmonizing procedures by getting arbitration 'discovery' under control.
Senior Vice-President of the American Arbitration Association (AAA) in charge of the International Centre for Dispute Resolution (ICDR).
See E. Bergsten, 'Americanization of International Arbitration' (2006) 18 Pace International Law Review 289; R.P. Alford, 'The American Influence on International Arbitration' (2003) Scholarly Works Paper 562; R.P. Alford, ed., 'Ten Ways to Avoid the Americanization of International Arbitration', Kluwer Arbitration Blog (21 Apr. 2010).