GPSolo Magazine - September 2005
Discovery in International Arbitration
This article surveys discovery law and practice in international arbitration and discusses circumstances where parties may wish to provide for discovery in their international arbitration clauses.
International arbitration rules. The rules of the principal arbitration institutions vary with respect to discovery.
The rules of the International Chamber of Commerce (ICC) do not address discovery at all, beyond requiring that a party provide the tribunal and adverse party with the documents upon which it intends to rely in support of its claim or defense. The only ICC rule relevant to discovery of other materials is Article 20(1), which gives arbitrators the authority to “establish the facts of the case by all appropriate means. . . .”
The International Arbitration Rules of the American Arbitration Association’s International Centre for Dispute Resolution provide that the arbitrators “may order parties to produce documents, exhibits or other evidence it deems necessary or appropriate.”
Similarly, the Rules of the London Court of International Arbitration provide that, unless the parties have agreed otherwise, the tribunal has the authority “to order any party to make any property, site or thing under its control . . . available for inspection” by the other party and “to order any party to produce . . . any documents or classes of documents in their possession, custody or power which the Arbitral Tribunal determines to be relevant.” The United Nations Commission on International Trade Law (UNCITAL) Rules, which are widely used in ad hoc arbitrations, provide, at Article 24(3): “At any time during the arbitral proceedings the arbitral tribunal may require the parties to produce documents, exhibits or other evidence. . . .”
The Rules of the International Centre for Settlement of Investment Disputes, which resolves disputes between governments and foreign investors, provide that the tribunal may “call upon the parties to produce documents, witnesses and experts; and visit any place connected with the dispute or conduct inquiries there.”
Before agreeing to arbitrate in a particular jurisdiction, parties should consider whether the law of the place of the arbitration permits enforcement of arbitrators’ orders regarding discovery. Assistance of local courts can be of critical importance in obtaining evidence, particularly from nonparties over which the arbitrators have no control. A party interested in the availability of discovery will take care to make sure that the arbitration is sited in a jurisdiction in which the courts will enforce the discovery orders of the arbitral tribunal.
The United Nations Commission on International Trade Law’s Model Law on International Commercial Arbitration, which has been adopted by about 30 nations, including Canada, and several U.S. states, provides that in the absence of an agreement between the parties, the arbitral tribunal may “conduct the arbitration in such manner as it considers appropriate” and may “request from a competent court . . . assistance in taking evidence.”
The U.S. Federal Arbitration Act and the arbitration law of many U.S. states grant broad powers to arbitrators to require production of documents as well as prehearing testi-mony by deposition. U.S. courts generally will not provide discovery beyond that ordered by the arbitral tribunal. The English Arbitration Act provides that an arbitral tribunal sitting in England may order the parties to produce relevant documents and compel the attendance of nonparties.
Although civil law countries are generally considered more reluctant to enforce discovery orders, national law in the most common international arbitration venues generally provides for such enforcement.
The practice of discovery in international arbitration. Notwithstanding the few provisions in international rules concerning discovery, at least some exchange of documents usually occurs in most arbitrations when significant sums are in dispute.
In 1999 the International Bar Association adopted Rules on the Taking of Evidence in International Commercial Arbitration (IBA Rules), which provide for exchange of documents prior to the hearings. The IBA Rules are used with increasing frequency in international cases, often by agreement of the parties prior to or at the time of the preliminary hearing. The IBA Rules permit parties to request “a narrow and specific requested category of documents that are reasonably believed to exist.” The IBA Rules also establish a method for resolving disputes about document production.
Even if there is no agreement to implement the IBA Rules, if a party makes a reasonable request for production of documents or categories of documents material to the dispute, it will be difficult for the party presented with that request to refuse to comply. The party faced with such a request may justifiably fear that the arbitrators will be interested in seeing all relevant documents and will draw appropriate inferences from the failure of a party to supply them. The party in such a position has to determine which is worse—the production of documents injurious to its case or the inferences that the arbitrators may draw.
The nationality of the arbitrators can make an important difference in these matters. Many civil law countries do not provide for any, or provide for very limited, discovery in litigation. Arbitrators from civil law jurisdictions typically decline to enforce requests for broad categories of documents or prehearing witness depositions.
If, however, the arbitrators or one or both of the law firms involved in the arbitration are accustomed to U.S. or U.K. court litigation, there will be an expectation that an evidentiary hearing should not be held without some document discovery. When lawyers of this same disposition represent both parties, or serve on the arbitral tribunal, an international arbitration can come to resemble litigation in the United States, with detailed document requests, interrogatories, and corresponding objections. Depositions under oath remain relatively rare in international arbitration, although informal “information sessions” or interviews with opposing witnesses and counsel prior to hearings may be conducted to facilitate the parties’ understanding of complex information, particularly concerning technical matters or damages.
Discovery provisions in arbitration clauses. In light of the inconsistencies in the practice, parties to contracts providing for international arbitration should consider whether to provide for or explicitly exclude discovery in their arbitration agreements. Contracts may expressly provide that there will be no exchange of information or that there will be the full panoply of discovery methods available under the U.S. Federal Rules of Civil Procedure. Or they may select anything in between, such as an exchange of relevant documents as provided under the IBA Rules.
In the typical case, parties to arbitration agreements have little interest in agreeing to the broadest possible discovery. Also, arbitrators inhospitable to U.S.-style discovery may be reluctant to police effectively such broad discovery provisions. A U.S. party contracting with a foreign entity to arbitrate in a civil law country before a panel likely to include a civilian lawyer as chair of the panel should consider such factors in determining whether to add discovery language to the arbitration clause.
Whether a party entering into an international arbitration agreement will benefit from or be disadvantaged by discovery will depend on the type of contract and the likely claims and defenses that will arise in a dispute. Moreover, even a particular party may be advantaged or disadvantaged by discovery, depending on the nature of the claim that is likely to arise in arbitration.
Grant Hanessian is a partner in the New York office of Baker & McKenzie LLP. He can be reached at email@example.com.
For More Information About the Section of International Law
- This article is an abridged and edited version of one that originally appeared on page 1 of International Law News, Winter 2005 (34:1).
- For more information or to obtain a copy of the periodical in which the full article appears, pleasecall the ABA Service Center at 800/285-2221 or go to www.ababooks.org.
- Website: www.abanet.org/intlaw.
- Periodicals: The International Lawyer, quarterly journal; International Law News, quarterly.
- Books and Other Recent Publications: China Law Deskbook, 2d ed.; The Foreign Corrupt Practices Act and the New International Norms; Careers in International Law, 2d ed.; Negotiating and Structuring International Commercial Transactions, 2d ed.; ABA Guide to International Business Negotiations, 2d ed.; Joint Ventures in the International Arena; ABA Guide to Foreign Law Firms, 4th ed.; International Lawyer’s Deskbook, 2d ed.; International Trademarks and Copyrights: Enforcement and Management, International Practitioner’s Deskbook Series.t Practices Act and the New International Norms; Careers in International Law, 2d ed.; Negotiating and Structuring International Commercial Transactions, 2d ed.; ABA Guide to International Business Negotiations, 2d ed.; Joint Ventures in the International Arena; ABA Guide to Foreign Law Firms, 4th ed.; International Lawyer’s Deskbook, 2d ed.; International Trademarks and Copyrights: Enforcement and Management, International Practitioner’s Deskbook Series.