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Executive Summary

The evidentiary process remains an integral part of any arbitration, although most arbitral rules remain silent on evidentiary principles. This is in sharp contrast to most domestic jurisdictions which have detailed rules of evidence. Indeed, one of the fundamental advantages of arbitration is often the lack of detailed rules of procedure, including evidence. Ignoring evidentiary principles in an actual arbitration, however, can have severe repercussions because cases are sometimes dismissed on purely evidentiary grounds.

1.0 Introduction

One of the features of arbitration is that the process is not bound by strict rules of procedure. As a consequence most arbitral rules do not provide detailed rules on evidentiary issues, in contrast with most national jurisdictions, which provide very detailed codes outlining rules of evidence. In addition, evidentiary issues in arbitration can also be characterised as being idiosyncratic as they can depend on the applicable law, the law of the seat of the arbitration, the background of the parties, their counsel and the arbitrators, and the location of the relevant evidence. However, evidentiary issues have assumed great significance in international arbitration proceedings in recent years. This chapter provides a business-friendly overview of some of the most important evidentiary principles and issues.

The two principal types of evidence, i.e., documentary and witness/expert testimony, are discussed in Section 2. Section 3 covers the rules and procedures to gain access to documents that are in the possession, custody or control of the opposing party. Sections 4 and 5 discuss the obligation of the parties to act in good faith and the tribunal’s discretion on evidentiary issues — two reoccurring themes underpinning the entire evidentiary process. Finally, Section 6 deals with the burden of proof (which party must prove something?), and Section 7 deals with the standard of proof (how much proof must a party produce to prove something?).

2.0 Types of Evidence

In any legal proceeding, including arbitration, a party must be in a position to produce sufficient evidence to support its claims. In order to do so, a party can provide evidence in various forms.

2.1 Documentary Evidence

A party to an arbitration is free to introduce “documents” that can be admitted as evidence. The International Bar Association Rules on the Taking of Evidence in International Arbitration (IBA Rules), which serve as “soft law”, have defined the term “document” in a broad manner to include: “a writing, communication, picture, drawing, program or data of any kind, whether recorded or maintained on paper or by

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electronic, audio, visual or any other means.”¹ “Document” thus has a broad meaning and includes forms of data that might not typically fall within the ordinary meaning of the term. Such documents may be internal or publicly available.

In most instances, contemporaneous documents that describe events or situations will be a stronger form of evidence and are therefore most desirable. It is however possible to submit non-contemporaneous documents that can be supplemented or corroborated with other forms of evidence.

2.2 Witness Testimony

2.2.1 Witnesses to Facts

A party might not have documents to support its claim. This can be because of the passage of time or because the documents were destroyed or a particular matter was never converted into documentary format. In that situation, a party can introduce a “witness of fact” to provide evidentiary testimony to clarify or supplement the factual record. The IBA Rules clarify that “[a]ny person may present evidence as a witness, including a Party or a Party’s officer, employee or other representative.”²

The selection of a witness of fact requires careful consideration. The best is a person who has direct knowledge of the facts. However, this might not always be practical or feasible because of work commitments, retirement, changes in job and the like. In such a case, a party might select the person who has succeeded the individual who had direct knowledge, in which case the witness should explain how he or she acquired the knowledge.

The testimony of a witness of fact is normally presented in the form of a written statement (a witness statement), which is supplied to the tribunal and the other side before the hearing. However, a witness of fact can be called to testify at the evidentiary hearing and can be cross-examined by the opposing counsel. The IBA Rules clarify that if a witness of fact has been requested to attend the hearing but fails to show up without a valid reason, the testimony of such witness is to be disregarded.³ At the same time, the Rules provide that if a witness of fact has not been called to testify, that does not mean that any party has admitted the correctness of the content stated in the witness statement.⁴

Questions relating to witness testimony, such as whether there will be direct examination or whether redirect examination is restricted to issues that have arisen during cross-examination, are matters that the parties should agree with the tribunal at the earliest available opportunity and in any event before the hearing.⁵

2.2.2 Expert Witnesses

In order to deal with technical matters or matters that require specific expertise, the IBA Rules permit an expert to provide evidence. Under these Rules, there are two categories of expert witness: the first and more common is a party-appointed expert; the second is a tribunal-appointed expert. In both instances, the goal of the expert is the same, i.e., to provide guidance based on “subject-matter” expertise.

For a party-appointed expert, the IBA Rules require that the expert provide an affirmation of belief in the opinion expressed, the instructions received from counsel, a statement of facts from which conclusions are based, and the methods and evidence used to produce the expert opinion.⁶ Importantly, even though a party might have appointed an expert, the expert remains independent and therefore is also required to provide a statement of independence from the parties, lawyers and the arbitral tribunal.⁷ It is possible for an expert opinion to be provided by more than one expert, in which case the report must attribute either the entirety of the report or specific parts of the report to each author. This is important because, as in the case of a witness to fact, the expert can be cross-examined by opposing counsel.⁸

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While a tribunal can appoint an expert, before doing so the IBA Rules require that the expert provide a statement of his or her qualifications and independence to the tribunal and the parties, and give the parties an opportunity to object to the appointment.⁹ If there is no objection, or if the tribunal has rejected any objection, the tribunal prepares the terms of reference for the expert in consultation with the parties.¹⁰ The parties also have an opportunity to respond to an expert opinion, either through a witness statement or a party-appointed expert,¹¹ and to cross-examine the expert.¹²

For both party-appointed experts and tribunal-appointed experts, in addition to cross-examination, another popular technique is “witness conferencing” or “hot tubbing”. Under this technique, experts sit together and provide testimony simultaneously on questions posed by the arbitrators or by counsel.¹³ This enables the experts to debate an issue and identify areas of convergence and divergence.

Practical Tips on Types of Evidence:

• A party must produce sufficient evidence to support its claims. It can do so in various forms but the most common methods are documentary evidence, evidence from a witness of fact, or expert evidence.
• Contemporaneous documents and a witness with direct knowledge of the facts constitute the strongest forms of evidence. However, if these forms of evidence are not available, others forms of evidence are permissible but they should ideally be corroborated.
• It is advisable to refer to the IBA Rules to make sure that the rules relating to witness and expert testimony are complied with, even if the parties have not formally agreed to the Rules.
• It is important to consult with the tribunal and with opposing counsel at the earliest possible opportunity to discuss and clarify evidentiary rules and all related modalities for the presentation of evidence.

3.0 Document Production

In order to present as strong a case as possible, it may be necessary to seek certain documents that are in the possession, custody or control of the other party. The arbitration process therefore envisions a limited form of document production. This can be contrasted with the approach to discovery in US courts, which can be very detailed and extensive.

The IBA Rules address the document production process,¹⁴ and combine procedures developed in civil law, common law and international arbitration.¹⁵ Several tribunals have used the IBA Rules for assistance, but have acknowledged that they are not formally bound by them.¹⁶

The document production process begins with a request to produce documents. The most common way to do this is through a “Redfern Schedule” (so called because it was suggested in a well-known arbitration treatise by Alan Redfern).¹⁷ The schedule contains four columns.

In the first column, the requesting party identifies the document that it seeks. In the second column, the requesting party states the relevance and materiality of the documents requested. The IBA Rules supplement the first two columns by calling for additional clarifications to be provided by the party seeking documents: (i) a description of the requested documents or a “narrow and specific” requested category of documents; (ii) a statement as to how the documents requested are “relevant to the case and material to its outcome”; (iii) a statement that the documents are not in the “possession, custody or control” of the requesting party or why it would be “unreasonably burdensome” for it to produce the documents; and (iv) a statement of why the requesting party assumes that the documents are in the “possession, custody

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or control” of the opposing party.¹⁸ The clarifications are intended to ensure that the document production process is restricted to a precise and specific category of documents that are reasonably known to exist.

The third column permits the other party to raise objections to the documents requested. The IBA Rules provides seven bases on which a party can seek the exclusion of evidence or to reject a request to produce documents:¹⁹

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;

5. Commercial or technical confidentiality;

6. Special political or institutional sensitivity (including evidence that has been classified as secret by a government or a public international institution); or

7. Procedural economy, proportionality, fairness or equality of the parties.

If the party does not object to a request made by the other party, it can voluntarily agree to produce the documents. It is advisable that the parties either agree among each other or with the assistance of the tribunal on the date for voluntary production along with the modalities for producing the documents (e.g., will the documents be provided electronically or in physical form? Will the documents be word-searchable if they are in electronic form?)²⁰

The fourth column is left for the tribunal to record its decisions on the basis of the objections by the parties. A failure to comply with a tribunal’s order to produce could lead the tribunal to draw an “adverse inference”²¹ and to order costs against the party that fails to comply.

Practical Tips on Document Production:

• The parties should consult with the tribunal and determine a schedule for document production at the earliest opportunity.
• Document production is intended to be a limited process, unlike the US court discovery process.
• The most common method to seek documents is through a Redfern Schedule (as supplemented by the IBA Rules) which helps the process take place in an efficient manner. This permits a tribunal to make a reasoned decision after reviewing the grounds for the request as well as objections to produce from the opposing party.
• Failure to comply with a tribunal’s decision on document production may lead to an adverse inference and/or an order of costs.

4.0 Obligation of Parties to Act in Good Faith

In international legal proceedings, the disputing parties have traditionally had a duty to collaborate with each other and to act in good faith in connection with evidentiary matters.22 To give effect to the obligation of good faith, Article 9.7 of the IBA Rules states:

If the Arbitral Tribunal determines that a Party has failed to conduct itself in good faith in the taking of evidence, the Arbitral Tribunal may, in addition to any other measures available under these Rules, take such failure into account in its assignment of the costs of the arbitration, including costs arising out of or in connection with the taking of evidence.

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5.0 Tribunal’s Discretion on Evidentiary Issues

As noted above, one of the features of the arbitration process is the lack of detailed rules on evidentiary issues. The rationale appears to be that parties should agree on evidentiary matters. However, in order to prevent abuse or injustice, most arbitral rules permit the arbitral tribunal to seek further evidence from the parties. For example, Article 25(5) of the 2012 International Chamber of Commerce Rules of Arbitration states: “At any time during the proceedings, the arbitral tribunal may summon any party to provide additional evidence.” Indeed, a tribunal has wide latitude of discretion in dealing with evidentiary issues.

6.0 Burden of Proof

The burden of proof establishes which party has to produce the evidence necessary to establish a claim or defence.²³ Even though most international arbitration rules are silent on the question of burden of proof, the general rule is that the party making an assertion has the burden of supporting it.24 This rule is based on a fundamental principle of Roman law and is also found in civil and common law traditions.²⁵ The implication of this rule is that a claimant has the burden of establishing all facts necessary to prove its claim while a respondent has the burden of providing evidence to support any defences it puts forward.²⁶

Allocation of the burden of proof raises an interesting question at the jurisdictional phase of a case, particularly if the case has been bifurcated, i.e., split into a jurisdictional phase and a phase dealing with the merits. This is because arguments at the jurisdictional phase are made before the parties have presented evidence relating to the merits of a case, even though a party might refer to the facts relating to the merits at this phase. The most common approach has been to follow the “pro tem” rule that has been applied by both the International Court of Justice and investment tribunals. Under this rule, the tribunal will accept pro tem (for the time being) the facts alleged by the complainant simply to determine whether the complainant has made a prima facie case. The only exception to this rule is that a party must establish all facts necessary to establish that the tribunal has jurisdiction over the matter.²⁷

When a party with the initial burden meets the appropriate evidentiary standard, the burden of production or burden of persuasion shifts to the other party, who must either produce evidence to rebut or clarify what has been stated, or admit what was presented.²⁸ This process of shifting the burden continues until the tribunal is able to form a view on the question presented.

7.0 Standard of Proof

The standard of proof answers the question: how much evidence needs to be produced by the party that has the burden of proof?²⁹

As a leading treatise has stated: “The degree of proof that must be achieved in practice before an international arbitral tribunal is not capable of precise definition, but it may be safely assumed that it is close to the ‘balance of probability’.”³⁰

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The only exception to this rule is with respect to issues of a quasi-criminal nature (such as allegations of bribery, corruption, forgery and tax evasion). In such cases, some tribunals have mandated a heightened standard of proof that is above “the balance of probabilities” standard but lower than the criminal law standard of “beyond reasonable doubt”. Other tribunals approach this issue from another perspective. Instead of demanding a heightened standard per se, they emphasise that “more” persuasive evidence is needed.³¹ Under either approach, the rationale appears clear as stated in a leading treatise:

In general, the more startling the proposition a party seeks to prove, the more rigorous the arbitral tribunal will be in requiring that proposition to be fully established. A classic example of this general rule is that an arbitral tribunal will be reluctant to find an executive of a company guilty of fraudulent activity in the exercise of his ordinary commercial activities, unless this is proved conclusively. In deciding what evidence to produce, and the means by which it should be presented, the practitioner should therefore make an evaluation of the degree of proof that the tribunal is likely to require, before being sufficiently satisfied to make a finding of fact that his client is seeking.³²

A tribunal may also make a finding of fact by relying on a factual or judicial presumption, inference, circumstantial evidence, and even hearsay evidence. However, in most instances where direct evidence is not available, corroborative evidence is usually required to support the proposition.

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Notes

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