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ISSN : 1875-4120 Fruits of the Poisonous Tree: Issue : (Provisional) The Admissibility of Unlawfully Obtained Published : October 20 4 Evidence in International Arbitration by J.H. Boykin and M. Havalic
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Fruits of the Poisonous Tree: The Admissibility of Unlawfully Obtained Evidence in International Arbitration1
James H. Boykin Malik Havalic
One of the most interesting features of the three awards handed down in the
arbitrations brought by the Yukos majority shareholders against the Russian
Federation (hereinafter referred to as the “Yukos Majority Awards”) was the
tribunal’s extensive reliance on illegally obtained evidence. Specifically, the
tribunal relied on confidential diplomatic cables from the United States
Department of State that had been published on WikiLeaks. WikiLeaks first began
publishing confidential diplomatic cables on November 28, 2010, nearly three
months after the first investment treaty tribunal to analyze the Russian Federation’s
tax assessments against Yukos issued its award finding that the tax assessments
constituted an unlawful expropriation.2
The WikiLeaks website describes the release of 251,287 leaked cables from
274 embassies, consulates and diplomatic missions over a period of 44 years as
“the largest set of confidential documents ever to be released into the public
1. “Fruit of the poisonous tree” refers to a U.S. evidentiary doctrine which precludes the introduction of evidence obtained illegally and in violation of the 4th Amendment’s prohibition of unconstitutional searches. See Nardone v. U.S., 308 U.S. 338, 341 (1939). Because of its relationship with the 4th Amendment, however, the doctrine is limited to criminal proceedings. See, e.g., Townes v. City of New York, 176 F.3d 138, 145 (2d Cir. 1999).
2. RosInvestCo UK v. Russian Federation, Award, ¶ 208 (12 September 2010). One of the authors participated in the representation of the claimant in the RosInvestCo case. 2 domain.”3 WikiLeaks obtained the confidential cables from Private Bradley
Manning, who was convicted in July 2013 of violating the United States’
Espionage Act, among other charges, and sentenced to 35 years of confinement.4
Private Manning was acquitted of the most serious charge of aiding the enemy, for
which she could have faced the death penalty.5 Secretary of State Hillary Clinton
described Private Manning’s disclosure and WikiLeaks’s publication of the
confidential diplomatic cables as nothing short of “an attack against the
international community.”6
In the Yukos Majority Awards, the tribunal relied upon the cables to resolve
the parties’ factual dispute about why Yukos’s auditor chose to withdraw its audit
reports of Yukos for the years 1995 to 2004.7 The claimants in the various Yukos
proceedings argued that the decision was the result of the Russian Federation’s
putting improper pressure on the auditor.8 The Russian Federation countered that
the auditor’s decision to withdraw its audit opinions arose “out of the genuine
3. Secret US Embassy Cables, WikiLeaks, https://wikileaks.org/cablegate.html.
4. Private Manning is a trans-gender female. Shortly after her conviction on August 21, 2013, she issued a statement that she had always felt that she was a woman and wished to begin hormone therapy. On April 23, 2014, a Kansas judge granted Private Manning’s request to change her first name to Chelsea.
5. Copies of charging sheets available at http://cryptome.org/manning-charge.pdf and http://www.washingtonpost.com/wp-srv/lifestyle/magazine/2011/manning/manning_charges.pdf. See also The Guardian, 2 March 2011, Bradley Manning may face death penalty.
6. Stephen Erlanger, Europeans Criticize Fierce U.S. Response to Leaks, The New York Times (Dec. 9, 2010), http://www.nytimes.com/2010/12/10/world/europe/10wikileaks-react.html?_r=0.
7. Hulley Enterprises Limited v. Russian Federation, Award, ¶ 1185-86.
8. Id. ¶ 1218. 3 concern that they were tainted by newly-discovered misrepresentations” and, thus, supported the Respondent’s defense that its actions against Yukos were nothing more than an exercise of its right to enforce its tax laws.9
In their awards, the arbitral tribunal resolved the dispute over what conclusion it was to draw from the auditor’s withdrawal as follows:
The record before the Tribunal is abundantly clear. [The auditor’s] treatment improved significantly once it started to cooperate with the authorities and then withdrew its audits. Almost overnight, charges were dropped against [the auditor’s] personnel. [The auditor’s] own legal problems started to be resolved. At the same time, some cases took longer to resolve, and concerns by [the auditor] over loss of its license were real. It is clear that cooperation from [the auditor], once given, was expected to be enduring.10
The record to which the tribunal referred included confidential diplomatic cables that had been published by WikiLeaks. Those confidential cables plainly influenced the tribunal’s interpretation of events:
[T]he candid views expressed by [the auditor’s] officials in the U.S. Embassy’s cables published by WikiLeaks confirm that [the auditor] was under pressure. The cables demonstrate that [the auditor] was concerned not to aggravate its difficulties with the Government (“better not raise the public profile of the case in ways that could come back to hurt the prospects for a reasonable solution”); that [the auditor] was anxious not to lose its license or its business in Russia; that it considered the Yukos cases to be politically motivated and saw some connections between the withdrawal of the audit opinions and [the auditor’s] treatment by the Russian Government; and that it felt that criminal charges in the expatriate tax case were being used as a
9. Id.
10. Hulley Enterprises Limited v. Russian Federation, Award, ¶ 1221. 4
“pressure tactic.” The Embassy considered [the auditor] to be under duress and concluded that “the political and legal concerns that are driving the heightened scrutiny of [the auditor’s] accounting practices appear to have taken on a life of their own.”11
If Secretary Clinton was right when she characterized the disclosure of the cables as “an attack against the international community”, then it is surprising that an international arbitral tribunal – constituted under an international treaty – would rely upon such evidence as heavily as the tribunal did in the Yukos Majority
Awards.12 After all, whether or not one agrees with Secretary Clinton’s characterization, it is beyond dispute that Private Manning’s disclosure of the cables was illegal under United States law.13 At a minimum, one would have expected at least some discussion of the compatibility of relying on such evidence with principles of international law and an articulation of a standard under which the admissibility of such evidence should be analyzed. Should the tribunal have relied on such evidence, particularly if it was not necessary for it to reach its ultimate holding? After all, even without the benefit of the WikiLeaks cables, the
RosInvestCo tribunal found that the Russian Federation’s tax assessments “can
11. Id. ¶ 1223 citing U.S. Department of State Cable No. 07MOSCOW1028, 12 March 2007 (Unclassified) (available at https://wikileaks.org/cable/2007/03/07MOSCOW1028.html); U.S. Department of State Cable No. 07MOSCOW5403, 15 November 2007 (Confidential) (available at https://wikileaks.org/cable/2007/11/07MOSCOW5403.html); U.S. Department of State Cable No. 07MOSCOW5083 (Confidential) (available at https://wikileaks.org/cable/2007/10/07MOSCOW5083.html).
12. The arbitral tribunal cited WikiLeaks at least 20 times.
13. Manning was found guilty of multiple violations of Articles 92 and 134 of the Uniform Code of Military Justice. See: Ernesto Londono, Rebecca Rolfe and Julie Tate, Verdict in Bradley Manning case, The Washington Post (Aug. 21, 2013), http://www.washingtonpost.com/wp-srv/special/national/manning-verdict/. 5 only be understood as steps under a common denominator in a pattern to destroy
Yukos and gain control over its assets.”14 But the Yukos Majority Awards are silent as to the propriety of admitting into evidence and relying on the WikiLeaks cables. Rather, they seem to assume that reliance on such unlawfully obtained evidence is unproblematic. But should investment treaty tribunals make such assumptions? Are there certain circumstances when unlawfully obtained evidence should be excluded? The purpose of this article is to survey investment treaty awards and judicial decisions from national courts that have grappled with the question of the admissibility of the WikiLeaks cables in search of guidance as to the appropriate circumstances under which investment treaty tribunals should admit and rely upon unlawfully obtained evidence.
I. The Standard of Admissibility of Unlawfully Obtained Evidence under International Law The most prominent arbitration award to have considered the issue of the admissibility of unlawfully obtained evidence is, of course, the decision of the tribunal in Methanex Corporation v. United States of America.15 The award in
Methanex was issued long before the WikiLeaks cables were published, but its
analysis of the question of whether unlawfully obtained evidence should be
admitted into evidence in an international arbitration provides a useful point of
14. RosInvestCo UK v. Russian Federation, Award ¶ 621 (12 September 2010).
15. Methanex Corporation v. United States of America, Award, ¶ 55 (NAFTA Ch. 11 Arb. Trib. 2005). 6 departure into the survey of cases involving the WikiLeaks cables. In Methanex, the tribunal was asked to admit into evidence “documentation [that] was obtained by successive and multiple acts of trespass committed by Methanex over five and a half months in order to obtain an unfair advantage over the USA as a Disputing
Party to these pending arbitration proceedings.”16 The Methanex tribunal reasoned that, “[a]s a general principle, therefore, just as it would be wrong for the USA ex hypothesi to misuse its intelligence assets to spy on Methanex (and its witnesses) and to introduce into evidence the resulting materials into this arbitration, so too would it be wrong for Methanex to introduce evidential materials obtained by
Methanex unlawfully.”17 After evaluating Methanex’s conduct, the tribunal held
that “it would be wrong to allow Methanex to introduce this documentation into
these proceedings in violation of its general duty of good faith and, moreover, that
Methanex’s conduct, committed during these arbitration proceedings, offended
basic principles of justice and fairness required of all parties in every international
arbitration.”18
16. Id. Part II, Chapter I, ¶ 59.
17. Id., ¶ 54.
18. Id., ¶ 59. 7
The Methanex tribunal’s reasoning was firmly grounded in the duty of good
faith that parties to an arbitration owe each other and the tribunal.19 The obvious
distinction between Methanex and the Yukos Majority Awards is that – by relying
on the WikiLeaks cables – none of the claimants in the Yukos arbitrations
breached the duty of good faith. If neither party participates in the unlawful
actions that led to the disclosure of the evidence, should both parties be free to use
that evidence as they see fit? Or, should the answer to that question depend on
whether one of the parties to the arbitration was the victim of the unlawful theft of
its confidential electronic documents, albeit not through the fault of any other party
to the arbitration? Stated another way, should the evidence have been
presumptively admissible because the Russian Federation does not have an interest
in preserving the confidentiality of diplomatic cables sent from the United States’
Department of State?20 What should the standards be for the admissibility of such
unlawfully obtained evidence?
One might understandably jump to the conclusion that the disclosure of the
WikiLeaks cables would primarily benefit claimants in treaty arbitrations. After
19. Id. at ¶ 54.
20. The Russian Federation made very clear its level of regard for the United States’ interest in enforcing its laws concerning the confidentiality and secrecy of certain government information when it granted Edward Snowden asylum. See Steven Lee Myers and Andrew E. Kramer, Defiant Russia Grants Snowden Year’s Asylum, The New York Times (Aug. 1, 2013), http://www.nytimes.com/2013/08/02/world/europe/edward-snowden- russia.html?pagewanted=all. See also: Michael Birnbaum, Russia grants Edward Snowden residency for three more years, The Washington Post (Aug. 7, 2014), http://www.washingtonpost.com/world/europe/russia-grants- edward-snowden-residency-for-3-more-years/2014/08/07/8b257293-1c30-45fd-8464-8ed278d5341f_story.html. 8 all, the cables often reflect the contents of confidential conversations between U.S. diplomats and foreign officials.21 But such an assumption would be misplaced; at least two Respondent states have tried to use the WikiLeaks cables in ICSID arbitrations.22 In ConocoPhillips v. Venezuela, Venezuela sought to persuade the
tribunal to revisit its decision on liability that had found that Venezuela had
breached its obligation to negotiate in good faith with the claimants.23 A majority
of the tribunal denied Venezuela’s request for reconsideration, and Venezuela
responded by challenging the majority’s impartiality.24 As the decision of the
Chairman of the World Bank’s Administrative Council rejecting Venezuela’s
challenge makes clear, Venezuela’s challenge was based on the tribunal’s failure to consider U.S. Embassy cables submitted with its application for reconsideration:
20. Venezuela also refers to U.S. Embassy cables – part of the WikiLeaks released after the hearing on the merits held in 2010 – submitted by the Respondent with the September 8 [2013] letter, to demonstrate that the Claimants made misrepresentations of fact at the hearing that proved decisive to the Challenged Arbitrators. Venezuela claims that these cables prove that the Claimants made false
21. See, e.g., U.S. Dep’t of State Cable, Kazakhstan: Minister of Economy Supports Closer Cooperation with U.S. Government, Astana, January 27, 2009, which describes the substance of a 90 minute meeting between the U.S. Ambassador and Kazakhstan’s Minister of Economy in which the Minister gave assurances that U.S. companies “will be protected” from the implementation of a new tax code that abrogated pre-existing contractual tax stabilization guarantees for everyone else.
22. See ConocoPhillips Petrozuata B.V., ConocoPhillips Hamaca B.V. and ConocoPhillips Gulf of Paria B.V. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/30; Decision on the Proposal to Disqualify a Majority of the Tribunal, 5 May 2014, ¶ 20; and Kilic Insaat Ithalat Ihracat Sanayi ve Ticaret Anonim Sirketi v. Turkmenistan, ICSID Case No. ARB/10/1, Award, 2 July 2013, ¶ 4.3.16.
23. Id. at ¶ 8.
24. Id. at ¶ 9-10. 9
representations to the Tribunal, upon which the decision of the Challenged Arbitrators on the lack of good faith negation was based.
21. Venezuela asserts that a decision based on misrepresentations would not comport with basic principles concerning the administration of justice and could not be made by arbitrators having the requisite impartiality under the ICSID Convention. Venezuela adds that “no legal system can endorse the position that an arbitrator has no power in a case still pending before him to rectify an obvious mistake, irrespective of whether its original opinion was based on misrepresentation, fraud, forged documents, false testimony or any other egregious misconduct” and that “this is the effect of the Challenged Arbitrator’s blanket refusal to even consider the facts on Respondent’s Application for Reconsideration.”25
The majority’s decision denying reconsideration was indeed silent about the
cables and their contents. In a field in which one has grown accustomed to
decisions of staggering length in which every argument raised by the parties is
often reproduced verbatim in the body of the award, one might infer from such
silence an implicit decision by the majority regarding the suitability of such
evidence. The majority’s silence about the evidence is especially difficult to
explain in light of the dissenting arbitrator’s contention that “the revelations of the
WikiLeaks cables submitted to the Tribunal as annexes to the Respondent’s letter
of 8 September 2013…[changes] the ground or cause for reconsideration []
radically in dimension and importance.”26
25. ConocoPhillips v. Venezuela, Decision on the Proposal to Disqualify a Majority of the Tribunal, 5 May 2014, ¶¶ 20-21.
26. ConocoPhillips v. Venezuela, Decision on Respondent’s Request for Reconsideration, Dissenting Opinion of George Abi-Saab, ¶ 24. The majority noted only in its Decision on Respondent’s Request for Reconsideration 10
While the utility of the WikiLeaks cables to both claimants and respondents in investment treaty arbitrations will diminish as time goes by, there will almost certainly be more disclosures of confidential government documents in the future.27 Future tribunals will almost certainly be called upon to consider evidence
from such sources. How should they consider objections regarding the
admissibility of confidential documents illegally obtained from government files?
The few publicly available arbitration awards that have referred to the
WikiLeaks cables do not offer much in the way of guidance. This article will
survey judicial decisions in proceedings that have presented national courts (and
international judicial bodies) with the opportunity to consider the question of
whether the Department of State cables disclosed by WikiLeaks should be
admissible to determine whether any guidance may be found there.
II. State Judicial Decisions to Have Considered the Admissibility of the WikiLeaks Cables Perhaps the most logical point of departure for a survey of judicial decisions
analyzing the admissibility of the WikiLeaks cables are decisions from courts in
that “this decision is limited to answering the question whether the Tribunal has the power which the Respondent would have it exercise. The decision does not address the grounds the Respondent invokes for reconsidering the part of the Decision which it challenges and the evidence which it sees as supporting those grounds. The power must be shown to exist before it can be exercised.” ConocoPhillips v. Venezuela, Decision on Respondent’s Request for Reconsideration, ¶ 9.
27. Mark Mazzetti and Michael S. Schmidt, Officials Say U.S. May Never Know Extent of Snowden’s Leaks, The New York Times (Dec. 14, 2013), http://www.nytimes.com/2013/12/15/us/officials-say-us-may-never-know- extent-of-snowdens-leaks.html?pagewanted=all.
11 the United States because those courts presumably have the greatest interest in protecting their government’s legitimate expectations with regard to secrecy and confidentiality of its confidential communications. We therefore first look at how the United States federal courts have treated the admissibility of unlawfully obtained evidence published on WikiLeaks. After that, we turn to a survey of decisions from the judicial systems of other nations and to the decisions of international tribunals, such as the European Court of Justice and the European
Court of Human Rights.
1. The Admissibility of WikiLeaks Cables in U.S. Federal Court Disclosures through the WikiLeaks forum have directly prompted both civil and criminal litigation in the United States federal courts. The information contained in the cables is of keen interest to a variety of litigants. In litigation to which the U.S. government is party, it routinely refuses to either confirm or deny the cables’ authenticity. Should a United States federal judge admit the evidence in such circumstances or should she affirmatively require the government to object to its authenticity?
One case illustrates the U.S. government’s predicament. The American
Civil Liberties Union submitted requests for the cables to the U.S. Department of
State under the United States’ Freedom of Information Act, even though the same 12 cables were already available through WikiLeaks.28 The Department of State refused to produce (or produced redacted portions of) twenty-three of the requested cables on the basis that they fell within a statutory exemption to disclosures.29 In a subsequent lawsuit brought by the ACLU to compel the Department of State to produce the requested cables, the court granted summary judgment in favor of the
Department of State, finding that it had discharged its burden of demonstrating that the documents were exempt from disclosure. The court rejected the ACLU’s argument that the prior public disclosure of the cables prevented the Department of
State from complaining about further disclosure. The court reasoned that:
No matter how extensive, the WikiLeaks disclosure is no substitute for an official acknowledgement and the ACLU has not shown that the Executive has officially acknowledged that the specific information at issue was a part of the WikiLeaks disclosure. Although the ACLU points to various public statements made by Executive officials regarding the WikiLeaks disclosure, it has failed to tether those generalized and sweeping comments to the specific information at issue in this case – the twenty-three embassy cables identified in its request.30
The holding in this case – which directly resulted from the illegal leaks – is
hardly surprising. After all, it effectively involved an application to force the
28. American Civil Liberties Union v. Department of State, 878 F. Supp. 2d 215 (D.D.C. 2012).
29. The Freedom of Information Act contains nine categories of matters which are exempted from disclosure. 5 U.S.C §. 552(b). In ACLU v. Department of State, the Department of State successfully invoked the first exemption, precluding disclosure of materials pertaining to matters that are “specifically authorized under criteria established by an Executive order to be kept secret in the interest of national defense or foreign policy and . . . are in fact properly classified pursuant to such Executive Order”). 5 U.S.C §. 552(b)(1)
30. ACLU v. Dep't of State, 878 F. Supp. 2d at 224. 13 government into confirming the authenticity of the documents and the federal court was understandably deferential to the executive branch’s prerogative to continue to
consider the documents confidential and not to be compelled to admit to their
contents. It is therefore perhaps more interesting to consider how the courts treat
such evidence in litigation that does not directly implicate the leaks or force the
government to take a position with regard to the authenticity or veracity of the
unlawfully disclosed cables. This most often occurs in litigation by third parties
who had nothing to do with the disclosure of the cables, but who nevertheless seek
to rely upon them. To some extent, a U.S. court’s treatment may depend on
whether the government is being forced to take a position with respect to the
authenticity of the unlawfully disclosed cables.
a. Cases in which the United States is a Party An early instance in which a federal court was asked to admit the
Department of State cables into evidence occurred in the course of the criminal
prosecution of Viktor Bout, an infamous arms trafficker.31 In that case, the defense
challenged the legality of Mr. Bout’s extradition from Thailand. The defense
relied on WikiLeaks cables for indications that his prosecution in the United States
was vindictively motivated. The cables showed that he supplied the United States
military with equipment in Iraq despite the fact that the federal government had
31. U.S. v. Bout, No. 08 Cr. 365 (SAS), 2011 WL 3369797, at *2 (S.D.N.Y. Aug. 2, 2011). 14 prohibited any transaction between him and U.S. nationals. According to the defense, the embarrassment caused to the Department of Defense prompted the government to pursue his prosecution through other agencies. Judge Shira
Scheindlin considered the WikiLeaks cables and rejected the defense on the merits.
Her decision, however, was entirely silent on the issue of the admissibility of the cables, perhaps due to the fact that the government raised no objection, stating only that the government took no position as to the authenticity of the cables. It is hard to escape the impression that the cables, even if their contents were true, were not sufficient to substantiate the defendant’s allegation of prosecutorial misconduct.
Such evidentiary deficiencies may ultimately explain the prosecution’s decision
not to object to the admissibility of the cables and Judge Scheindlin’s apparent
decision to take them at face value.
The case of Mobley v. C.I.A. is illuminating because it illustrates that the
U.S. government’s objection to the admissibility of unlawfully obtained evidence
that is published on sites like WikiLeaks has nothing to do with the dubious
manner in which such evidence came into the public domain.32 In that case, the plaintiffs had brought suit against the Central Intelligence Agency based on its denial of their request under the Freedom of Information Act for information concerning the CIA’s activities abroad. The plaintiffs relied heavily on private
32. Mobley v. C.I.A., 924 F. Supp. 2d. 24, 50-51 (D.D.C. 2013). 15 emails from Strategic Forecasting, Inc. that were stolen from that companies computers and subsequently published by WikiLeaks.33 The court was not asked to consider the diplomatic cables, but it was asked to consider evidence published illegally on the same forum. The government declined to object to the admissibility of the WikiLeaks evidence. In fact, the government went so far as to downplay the sensitivity of the information. The court noted that “[t]he
Government has assured the Court that ‘it is unnecessary to treat as presumptively classified here an unofficial, non-government document obtained from the public domain,’ and therefore ‘the Government has no objection to the filing of this email on the public record.’”34
A case from the U.S. District Court for the District of Columbia presented a
more difficult situation. 35 The Rimi case involved a habeas corpus petition that
Mohammad Rimi filed while he was a detainee at Guantanamo Bay.36 After Rimi
was transferred from Guantanamo Bay to a prison in Libya, the court dismissed his
petition as moot. After the cables became public, a “next friend” sought
33. The Strategic Forecasting, Inc. (“Stratfor”) documents were reported to have been unlawfully obtained by the Anonymous hacker collective and released to WikiLeaks.
34. Mobley v. C.I.A., 924 F. Supp. 2d. 24, at 51, n. 19
35. Rimi v. Obama, CV 13-0908 (RJL), 2014 WL 3640794, at *2 n.5 (D.D.C. July 23, 2014). See also Amanatullah v. Obama, 904 F. Supp. 2d 45, 56-57 (D.D.C. 2012) (Here a habeas corpus petitioner introduced WikiLeaks evidence that the U.S. was deliberately using Bagram air base as a detention site in order to avoid constitutional jurisdiction, the court considered and rejected the argument on the merits without regard for the source of the evidence).
36. The writ of habeas corpus permits an incarcerated person to challenge the basis for their detention. See 28 U.S.C. § 2241. 16 reinstatement of the petition on his behalf on the grounds that the WikiLeaks cables directly contradicted the government’s earlier testimony in the prior proceedings, because they demonstrated that he was in the constructive custody of the United States. The district court described the evidence in its decision:
The first document is a purported March 2006 Department of Defense “Detainee Assessment” regarding Rimi, which includes a recommendation concerning transferring him to another country and the circumstances of such a transfer. Next, two purported State Department cables from December 2007 and February 2009 appear to document visits to Rimi by U.S. government personnel during his detention in Libya and reference an “MOU,” or memorandum of understanding, between the U.S. and Libya regarding Rimi's detention.37
From the court’s description, the evidence would appear to support the petitioner’s
argument that the petitioner’s habeas corpus petition was no longer moot because
he was in the constructive custody of the United States. The materiality of the evidence and its probative value to the issue before the court were much higher than the evidence the before the court in U.S. v. Bout.38 The enormous probative value of the evidence threatened to force the government into having to comment on the information in the cables. The government’s case would be much weaker if its response to this evidence was limited to neither confirming nor denying the authenticity of the cables.
37. Rimi v. Obama, 2014 WL 3640794, at *2.
38. 2011 WL 3369797, at *2 (S.D.N.Y. Aug. 2, 2011). See supra, n 31, at 13 and accompanying discussion. 17
Judge Richard Leon’s decision describes some “procedural back-and-forth”
regarding the admissibility of the cables while Rimi’s case was stayed during
consideration of a similar matter by the Court of Appeals for the D.C. Circuit.
However, Judge Leon ultimately was able to avoid opining on the probative value
of the evidence or the merits of the petition, because in the meantime, the
petitioner escaped when political opponents of the Libyan government stormed the
prison. Because Rimi was no longer in custody, the court decided that the petition
was indeed moot. Judge Leon was able to avoid the complicated question of
whether the court should grant the petition and order the release of a person from
prison based on evidence the government could not comment upon. In his decision
Judge Leon wrote the following passage that suggests sensitivity to the
government’s position:
The Government “neither confirm[s] nor den[ies] the authenticity of [the purported Department of Defense and State Department documents relied on by petitioner], including allegedly classified documents published by outside entities such as WikiLeaks.” … Because the three documents are marked with a “Secret” classification and because the details of their contents are not essential to my decision today, I refer to them only in general terms.39
b. Cases in which the United States is not a party The United States courts have, however, been receptive to the use of
confidential documents unlawfully disclosed by WikiLeaks in cases in which the
39. Rimi at *2 n.5 (internal citation omitted). 18
U.S. government was not a party. Even before Private Manning’s leak and the publication by WikiLeaks of the Department of State cables, a group of banks had sought unsuccessfully to enjoin WikiLeaks from posting confidential and personal banking documents.40 They were unsuccessful.
In Wultz v. Bank of China, the relatives of a suicide bombing victim tried to
compel the Bank of China to produce documentation in an effort to show Bank of
China’s knowledge that a terrorist group was using its accounts.41 The Bank of
China resisted the Wultzes’ attempt to introduce State Department cables.42 This effort proved to be counterproductive for Bank of China, because the court ultimately compelled the defendant to produce the documents at issue on the grounds that alternative evidence necessary to establish a critical element of the plaintiff’s claim was unavailable.43
In Bible v. United Student Aid Funds, Inc., defendant USA Funds moved to
strike portions of the plaintiff’s complaint based on information that had been
improperly disclosed and hosted by WikiLeaks.44 The information in question, a
Guarantee Services Agreement between USA Funds and Sallie Mae, had been
40. Bank Julius Baer & Co. v. Wikileaks, 535 F. Supp. 2d 980 (N.D. Cal. 2008).
41 Wultz v. Bank of China Ltd., 942 F. Supp. 2d 452, 467 (S.D.N.Y. 2013).
42 Id. at 467 n.68.
43 Id. at 467.
44. Bible v. United Student Aid Funds, Inc., 1:13-CV-00575-TWP, 2014 WL 1048807 (S.D. Ind. Mar. 14, 2014). 19 posted to WikiLeaks by a party in a previous litigation in direct violation of that party’s agreement that documents would be produced for “attorney’s eyes only.”
In that previous litigation, USA Funds successfully moved for the sanction of dismissal on the basis of the improper disclosure.45 USA Funds was not successful in excluding the evidence in Bible. Instead, the Bible court emphasized the plaintiff’s clean hands and the wide public dissemination of the information contained in the documents:
Ms. Bible obtained these documents from [publicly] available online sources, not from the parties in the [previous litigation]. The documents have been available in the public domain for more than five years, and this Court does not have the power or ability to limit its access. … Ms. Bible's complaint does not put this material “in the public eye” any more than the internet has already done so.46
One might have expected the judiciary of the United States to share the
sense of outrage over the disclosure of the cables expressed by members of the
executive branch, such as the sentiments expressed by Secretary Clinton, and to take a dim view of the use of evidence that was – without a doubt – obtained in violation of federal law. Instead, the decisions of the federal courts mostly reflect the pragmatic reality summed up by the well-known saying that “you can’t put the genie back in the bottle.” But when judicial proceedings threaten to force the executive branch to take a position about the authenticity of the evidence, then the
45. Id. at *4; see also Salmeron v. Enterprise Recovery Systems, Inc., 579 F.3d 787 (7th Cir. 2009).
46. Bible, 2014 WL 1048807, at *4. 20
U.S. federal courts exhibit some reluctance to consider such evidence. It remains to be seen whether that reluctance would persist in the face of highly material probative evidence.
2. The Admissibility of WikiLeaks Cables in Foreign and International Courts One might expect foreign and international courts to take an approach similar to the courts of the country directly injured by the unlawful disclosure of the WikiLeaks cables. If the United States courts do not appear terribly concerned about relying on such evidence, then a similarly relaxed attitude would seem likely to prevail before international tribunals and the courts of foreign jurisdictions.
a. The admissibility of WikiLeaks cables before international tribunals International tribunals perhaps have been the most receptive to the admissibility of the Department of State cables as evidence. In the prosecution of former Liberian President Charles Taylor, the defense moved to admit a series of documents, including the leaked diplomatic cables. According to the defense, one cable cast doubts on the impartiality of the court by suggesting that one of the judges may have deliberately slowed court proceedings to ensure that she headed the trial chamber when the court delivered his sentence.47 The defense also argued, based on other cables, that Mr. Taylor’s prosecution was political. For example,
47. See U.S. Department of State Cable (Netherlands), SCSL’s Taylor Trial Meets Key Milestone, But SCSL Still Faces Serious Hurdles, April 15, 2009. 21 one classified cable written by U.S. Ambassador Linda Thomas-Greenfield contained the following passage:
The best we can do for Liberia is to see Taylor is put away for a long time and we cannot delay for the results of the present trial to consider next steps. All legal options should be studied to ensure that Taylor cannot return to destabilize Liberia. Building a case in the United States against Taylor for financial crimes such as wire fraud would probably be the best route.48
The prosecution opposed the cables’ admission on grounds of relevance. The prosecution did not object to the cables based on the unlawful manner in which they were disclosed. The court admitted the cables on the grounds that the court’s evidentiary rules allowed the admission of evidence if it was relevant and its
“reliability [was] susceptible of confirmation.”49
WikiLeaks cables have also been introduced in proceedings before the
European Court of Human Rights. In El Masri v. F.Y.R. Macedonia, an applicant
to the ECtHR raised claims against Macedonia for Macedonia’s participation in the
Central Intelligence Agency’s “extraordinary rendition” of the applicant to a secret
48. Ian Cobain, CIA Rendition: more than a quarter of countries ‘offered covert support’, The Guardian (Feb. 5, 2013), available at http://www.theguardian.com/world/2013/feb/05/cia-rendition-countries-covert-support.
49. Prosecutor v. Taylor, Case No. SCSL-03-01-T-1171, Decision on the Urgent and Public with Annexes A-C Defence Motion to Re-Open its Case in Order to Seek Admission of Documents Relating to the Relationship between the United States Government and the Prosecution of Charles Taylor (SCSL TCII, Jan. 27, 2011). Justice Sebutinde recused herself from consideration of the motion to admit the cables. 22 detention facility.50 Among the documents submitted to the court were various
WikiLeaks cables in which U.S. embassies “reported to the U.S. Secretary of State about the applicant’s case and/or the alleged CIA flights and the investigations in
Germany and Spain.”51 In one cable, the German Deputy National Security
Advisor is quoted as saying that “the facts are clear, and the Munich prosecutor has
acted correctly” by seeking to have international arrest warrants issued for
participants in the “rendition.”52 While the court did not subsequently refer to the particular evidence in the cables, it also made no indication that the evidence was improper nor did it otherwise qualify its inclusion in the record.
The European Court of Justice expressly ruled in favor of a party seeking to introduce leaked cables. In Persia International Bank v. Council, the applicants were banking entities challenging restrictive measures applied to them as part of the sanctions regime against the Islamic Republic of Iran.53 As part of their argument, they used leaked cables to suggest that the European Union member states were pressured by the United States to adopt the measures, claiming that it
“cast doubt on the lawfulness of the measures adopted and of the procedure for
50. The concept of “extraordinary rendition” or “irregular rendition” is often “used to refer to the extrajudicial transfer of a person from one State to another.” Garcia, Congressional Research Service, Renditions: Constraints Imposed by Laws on Torture, September 8, 2009.
51. El-Masri v. Former Yugoslav Republic of Macedonia, Judgment, 39630/09 (2012).
52. U.S. Department of State Cable, Al-Masri Case – Chancellery Aware of USG Concerns, February 6, 2007.
53. Case T-493/10, Persia International Bank v. Council, 2013 E.C.R. 23 their adoption.”54 The European Council and Commission both disputed the merits
and argued that “no account should be taken of the diplomatic cables.”55 The ECJ
ruled in favor of the applicant stating that “the prevailing principle of European
Union law is the unfettered evaluation of evidence.”56 It continued: “In the
present case, since the applicant was not involved in the disclosure of the
diplomatic cables, the possibly unlawful nature of that disclosure cannot be held
against it. Further, the evidence in question is relatively credible since its
authenticity has not been disputed by the United States Government.”57 As in
Bible, the ECJ stressed the clean hands of the party seeking to introduce the
evidence.
b. The admissibility of WikiLeaks cables in national courts (other than the United States) In contrast to international tribunals, the national courts of some states have
found the cables inadmissible as evidence regardless of whether or not the party
seeking to introduce the evidence was involved with the unlawful disclosure. For
example, in Spain, the Audiencia Nacional refused to admit WikiLeaks evidence.58
The case involved a public contract to build a solar power plant. Two companies
54. Id. at 89.
55. Id. at 90.
56. Id. at 95.
57. Id.
58. S.A.N., Jun. 26, 2013 (No. 2830/2013). 24 who were not chosen for the contract brought an action seeking to annul the decision awarding the contract to Solar Reserve, a competitor. They claimed that the conditions of the competition had been drafted in such a way so as to ensure that Solar Reserve would obtain the contract. The plaintiffs introduced a
Department of State cable released by WikiLeaks that reflected the contents of a discussion between the Spanish Minister of Energy and the United States
Ambassador to Spain in which the Ambassador “urged the Minister and the
Secretary to look at the company’s arguments again and see if anything could be done.”59 Despite the fact that the particular cable at issue was designated by the
United States Department of State as “Unclassified”, the Audiencia Nacional nevertheless stressed the unlawful manner in which the cable had become public:
The mere information reflected in a major newspaper [like El Pais], which claims that it is merely repeating the cables made public by WikiLeaks, cannot be taken into account. Not only do we reject the authenticity of such information, but the disclosure of cables coming from the US Embassy is evidence obtained unlawfully whose consideration is forbidden in accordance with article 11 of LOPJ [Ley Organica del Poder Judicial], as has been highlighted multiple times by the Constitutional Court. The Court has reiterated that the use of evidence that was obtained through a violation of fundamental rights, in this case communications that were subject to secrecy, is inconsistent with the right to an effective remedy and to a fair trial (Article 24 of the EC).60
59. U.S. Department of State Cable, Ambassador Solomont’s January 25 Call on Industry, Tourism, Commerce, January 26, 2010, available at http://www.wikileaks.org/plusd/cables/10MADRID86_a.html.
60. S.A.N., Jun. 26, 2013 (No. 2830/2013) at 5 (authors’ translation). 25
In this case, the evidence contained in the cable was not particularly compelling.
One is left to wonder whether the Audiencia Nacional would have reached the same conclusion if the cable clearly had demonstrated illegal conduct on the part of the government officials. Could the court have ignored highly probative evidence of a significant offense?
There are other examples of courts outside the U.S. refusing to admit the cables into evidence. In Turkey, the People’s Liberation Party filed a complaint against Prime Minister Erdogan that alleged he had received improper benefits from eight accounts held with Swiss banks. One of those cables contained the following statement by the United States Ambassador to Turkey:
We have heard from two contacts that Erdogan has eight accounts in Swiss banks; his explanations that his wealth comes from the wedding presents guests gave his son and that a Turkish businessman is paying the educational expenses of all four Erdogan children in the U.S. purely altruistically are lame.61
The Ankara Chief Prosecutor’s Office of Parliamentarians dismissed the complaint. In its dismissal it referred to the cables as “gossip material” and that admitting such evidence “may lead to unacceptable results in terms of universal
61. U.S. Department of State Cable, Erdogan and AK Party after two years in power: to get a grip on themselves, on Turkey, on Europe, December 30, 2004, available at https://www.wikileaks.org/plusd/cables/04ANKARA7211_a.html. 26 legal principles.”62 The Prosecutor did not specify which “universal legal principles” he relied upon.
Courts in other countries have reached the opposite conclusion and admitted the WikiLeaks cables with little apparent concern for how those cables became public. For example, Argentine members of a human rights organization brought suit against the Argentine military for the alleged slaughter in 1974 of unarmed guerrillas who had surrendered to the army. Reports indicate that complainants in that case will be allowed to introduce into evidence at trial Department of State cables that confirm the military’s involvement in the execution of the guerrillas.63
In Australia, two separate petitioners for immigration protection used WikiLeaks
evidence of paramilitary activity in Sri Lanka, and the Australian courts evaluated
and considered that evidence.64
c. The Bancoult Cases It is the courts of the United Kingdom that have produced the most detailed decisions to have grappled with the question of the admissibility of the leaked cables. R. (on the application of Bancoult) v. Secretary of State for Foreign and
62. WikiLeaks ‘gossip material’, Hurriyet Daily News (Jan. 12, 2013), http://www.hurriyetdailynews.com/wikileaks- gossipmaterial.aspx?pageID=238&nID=38900&NewsCatID=338.
63. Sumarán cables de Wikileaks al juicio de la Masacre de Capilla del Rosario, EL ESQUIU (April 17, 2013), http://www.elesquiu.com/notas/2013/4/17/policiales-278564.asp.
64. SZTDQ v. Minister for Immigration, Multicultural Affairs and Citizenship, [2014] FCCA 537; SZRCD v. Minister for Immigration and Citizenship [2012] FMCA 1190. 27
Commonwealth Affairs (hereinafter “Bancoult I”), involved a suit by an indigenous group from the Chagos Archipelago in the British Indian Ocean Territory. In
1966, the United States and the United Kingdom entered into an agreement under which the area would be used for a U.S. naval base. The U.K. ordered and facilitated the removal and exclusion of the population from the islands. The action resulted in protracted litigation in the United Kingdom. In Bancoult I, the plaintiffs alleged that the U.K.’s 2010 designation of the islands as a Marine
Protected Area (MPA) was illegal, in part because it was specifically intended to continue the exclusion of displaced islanders.65
The English High Court of Justice was faced with the plaintiff’s introduction
of a leaked cable from the U.S. embassy in London which memorialized
discussions between the U.S. and U.K. governments about the MPA proposal.66
The Secretary of State opposed admitting the cable. The court observed that “[f]or
reasons that are entirely understandable, it is not the policy of the Secretary of
State to admit or dispute that documents leaked by WikiLeaks such as those relied
on upon in this case are or are not genuine.”67 The Secretary of State also
“submitted that it would be wrong to order cross examination on the basis of
65. See generally R. (on the application of Bancoult) v. Secretary of State for Foreign and Commonwealth Affairs (“Bancoult II”), [2013] EWHC 1502 (Admin), ¶¶ 4-20, for the factual background of the dispute.
66. R. (on the application of Bancoult) v. Secretary of State for Foreign and Commonwealth Affairs) (“Bancoult I”), [2012] EWHC 2115 (Admin), ¶¶ 3, 6.
67. Id. ¶ 8. 28 documents that had been unlawfully obtained by WikiLeaks. To do so would be to further WikiLeaks’s improper purposes.”68 The court ultimately disagreed, concluding:
15. I also acknowledge that the WikiLeaks documents must have been obtained unlawfully, and in all probability by the commission of a criminal offence or offences under the law of the United States of America. I understand why it is the policy of HM Government neither to confirm nor to deny the genuineness of leaked documents, save in exceptional circumstances, particularly where, as here, the documents in question are not those produced or received by the UK Government.
16 However, the documents in question have been leaked, and indeed widely published. No claim has been made to the effect that the documents should not be considered by the Court on the grounds of public interest immunity or the like. They are before the Court. The Court will have to decide whether or not they are genuine documents, that they are copies of what they purport to be. The memorandum … appears to be a detailed record, which could fairly be the basis of cross examination.
17. I do not see how the present claim can be fairly or justly determined without resolving the allegation made by the Claimant, based on the WikiLeaks documents, as to what transpired at the meeting…69
In 2013, however, the High Court revisited the issue (hereinafter, “Bancoult
II”). The High Court took a closer look at the admission of WikiLeaks evidence in
response to new arguments by the Secretary of State and a superseding ruling
interpreting the Vienna Convention on Diplomatic Relations 1961 (the “Vienna
Convention”). The High Court began with a few assumptions: (1) that the
68. Id. ¶ 13.
69. Id. ¶¶ 15-17 (emphases added). 29 documents were genuine for the sake of argument, but without making a finding of fact on the issue, and (2) that the documents were obtained by illicit means from a
U.S. storage facility other than the U.S. embassy in London.70 The court considered the first of the defendant’s new arguments by querying whether the court’s use of the documents constituted a Crown servant’s “damaging disclosure, without lawful authority, of any information document or other article relating to defence or international relations” under the Official Secrets Act.71 The High
Court concluded that such a disclosure could not be damaging because “[e]xtensive prior disclosure of the document and of the information contained in it means that the further disclosure effected by its use in these proceedings is not damaging.”72
The High Court next considered the Secretary of State’s objection based on the Vienna Convention that admitting the cables would violate the Diplomatic
Privileges Act of 1964, which enacted the provisions of the Vienna Convention on
Diplomatic Relations. Specifically, the Secretary of State contended that admitting the cables into evidence would constitute a breach of Articles 24 and 27 of the
Vienna Convention, which make diplomatic records “inviolable”.73 The High
Court considered itself bound by a 1988 decision of the House of Lords in
70. Bancoult II, ¶ 30.
71. Id. ¶¶ 31-36.
72. Id. ¶ 36.
73. Id. ¶ 37. 30
Shearson Lehman Brothers v. Maclaine Watson & Co. In that case, an international organization that enjoyed the privileges guaranteed under the Vienna
Convention sought to prevent the use of materials illicitly obtained from its archives in litigation. The Shearson Lehman court found that “inviolability” under the Vienna Convention meant freedom from “executive or judicial action by the host state,” which included its use in judicial proceedings.74 The High Court also
found irrelevant the fact that the leaked cables were most likely stored on servers
outside of the U.K.75 After considering other cases, including El-Masri and the
Iranian banks, the High Court concluded:
Nothing in this material persuades us that we should depart from what appears to be, by now, a settled principle of public international and municipal law, that the inviolability of diplomatic communications requires that judicial authorities of states parties to the 1961 Convention should, in the absence of consent by the sending state, exclude illicitly obtained diplomatic documents and correspondence from judicial proceedings. Accordingly, we consider the document to be inadmissible as evidence in these proceedings.76
It was not long before the High Court’s decision in Bancoult II was reviewed
by the Court of Appeal (“Bancoult III”).77 The Court of Appeal held that it was not bound by the decision in Shearson Lehman and also distinguished that decision
74. Id. ¶¶ 40, 46.
75. Id. ¶ 45.
76. Id. ¶ 51.
77. R. (on the application of Bancoult) v. Secretary of State for Foreign and Commonwealth Affairs) (“Bancoult III”), [2014] EWCA Civ. 708. 31 on the grounds that it was “not addressing a case (such as the present case is assumed to be) where the document has not been obtained from the mission illicitly or by improper means, is in the public domain for the whole world to see and the party wishing to adduce the document in evidence has not been complicit in the publication of the document.”78 Furthermore, after thorough analysis, the
Court of Appeal analyzed the concept of “inviolability” under the Vienna
Convention and held that “inviolability” did not encompass the passive use of
already disclosed documents as evidence, but rather that:
Inviolability involves the placing of a protective ring around the ambassador, the embassy and its archives and documents which neither the receiving state nor the courts of the receiving state may lawfully penetrate. If, however, a relevant document has found its way into the hands of a third party, even in consequence of a breach of inviolability, it is prima facie admissible in evidence. The concept of inviolability has no relevance where no attempt is being made to exercise compulsion against the embassy. Inviolability, like other diplomatic immunities, is a defence against an attempt to exercise state power and nothing more.79
The Court of Appeal upheld the High Court’s ruling as to the absence of a
“damaging” disclosure under the Official Secrets Act.80 Unfortunately for the
plaintiffs, however, the court ultimately ruled that lower court’s refusal to admit
78. Id. ¶ 37.
79. Id. ¶ 58.
80. Id. ¶ 73. 32 the cable “had no effect on the proceedings” and declined to allow the appeal on the merits to go forward on that basis.81
III. Discerning a Standard Europeans were mostly critical of the ferocity of the response by the United
States to the disclosure of the cables.82 Yet courts in Europe (notably Spain and
Turkey) are the only ones to have refused to admit the cables into evidence on the
basis of the manner in which the cables were obtained. And it was an English
court that took a hard look at whether the admissibility of the cables was consistent
with principles of international law. In contrast, the United States federal courts
have taken a nonchalant approach, except in those few cases in which the
proceeding threatens to force the executive branch to take a position with regard to
the authenticity of the evidence.
It is difficult to discern from the cases surveyed any clear standard for
analyzing the admissibility of the WikiLeaks cables or documents obtained
through similarly unlawful means. However, there would appear to be one
common thread running through the cases. In order to see that thread, it helps to
recall one particular paragraph in the Methanex decision:
The second issue is materiality. The Tribunal considered the content of the Vind Documents carefully, assisted by the submissions from Methanex’s
81. Id. ¶ 93. Indeed, the appeal was ultimately rejected in its entirety on a number of grounds. Id. ¶ 159.
82. Stephen Erlanger, Europeans Criticize Fierce U.S. Response to Leaks, The New York Times (Dec. 9, 2010), http://www.nytimes.com/2010/12/10/world/europe/10wikileaks-react.html?_r=0. 33
Counsel as to their relevance to its case. By the time of the main hearing in June 2004, the Vind Documents were of only marginal evidential significance in support of Methanex’s case. There was other direct oral and documentary evidence relating to the meeting of 4th August 1998 between Mr Davis and ADM and other contacts between Mr Vind and Mr Davis; and the Vind Documents, as explained by Methanex’s Counsel at the main hearing, could not have influenced the result of this case. Insofar as Methanex was seeking to discredit Mr Vind as a factual witness by using the Vind Documents during his cross-examination at the main hearing, it need only be said that, in all the circumstances, no such attempt could ever have succeeded in the manner originally intended by Methanex.83
The Methanex decision was unequivocal in its criticism of the claimant for
“trespassing onto private property and rummaging through dumpsters inside the
office-building for other persons’ documentation” and in its holding that such
conduct had no place in international arbitration. But by including an element of
materiality in its analysis, the Methanex tribunal implicitly acknowledged that the
manner in which evidence is obtained would not always justify excluding the
evidence. As with the decision in Methanex, the materiality of the evidence to be
introduced plays an important role in many of cases surveyed above, although it
does not serve to predict how any particular court will rule. One might distill from
these cases the following means of analyzing whether unlawfully obtained
evidence should be admitted in international arbitration:
1. Did the party seeking to introduce the evidence participate in unlawful
activity that led to its disclosure? If no, proceed to the next step. If
83. Methanex Corporation v. United States of America, Award (NAFTA Ch. 11 Arb. Trib. 2005), Part II, Chapter I, ¶ 56. 34
yes, then the evidence is presumptively inadmissible. Such a
presumption would serve to deter undesirable conduct. Of course,
complicated questions may arise regarding the exact extent of the
party’s involvement in the unlawful activity through which the
evidence was obtained. Similarly, one cannot simply ignore the
nature of the allegedly unlawful activity. Not every technical legal
violation should result in the exclusion of the evidence, although such
violations may justify a heightened showing by the party seeking to
introduce the evidence of its materiality and relevance (see step two).
In addition, cases in which the evidence is obtained by breaching the
laws of states with which the arbitrators may not agree, such as the
laws of some authoritarian states, present similar complications. In
such cases, regard should be paid to the timing of the unlawful
activity that led to the discovery of the evidence. If it occurred during
the arbitration, a very strong presumption against its admissibility
should apply. That presumption might be relaxed depending on how
long before the arbitration the offense occurred and how serious the
offense. There are doubtless other issues that might arise.
2. Is the evidence material to an issue in the case which the tribunal is
required to decide? If the answer to that question is no, then the 35
evidence should not be admitted. In such circumstances, the
tribunal’s need for evidence does not justify the tribunal implicitly
endorsing the illegal activity by including within its award any “fruits
of the poisonous tree.” If it is relevant and material, its admissibility
should be further analyzed with regard to the interests of the other
parties to the arbitration who may have been victims of the unlawful
conduct.
3. Was the evidence unlawfully obtained from the files of a party to the
arbitration, although at no fault of the party seeking to introduce the
evidence? If no, the evidence should be admissible. If yes, the
evidence should be presumptively inadmissible unless it is the only
evidence available and absolutely necessary to the party to prove its
case.
Of course, there is no way to prevent an international arbitral tribunal from seeing such evidence. Once it is put before the tribunal, the tribunal cannot forget what it has seen, especially if it is highly relevant. Indeed, parties to arbitral proceedings will often have tactical reasons for deciding not to object to the admissibility of such evidence. For example, a party might decide that it does not wish to draw the tribunal’s attention to the evidence or risk suggesting that it is worried about what conclusions the tribunal might draw from it. As a practical 36 matter, a party might be more likely to raise an objection to the evidence where the objection is based on its opponent’s unlawful conduct when it obtained the evidence. The intention underlying such an objection would be, of course, to show the tribunal that its opponent is not to be trusted.
Even in the absence of such objections, international tribunals may wish to think critically about whether or not to publish such unlawfully obtained evidence in their awards. Does showcasing such evidence incentivize future unlawful disclosures by placing the arbitral tribunal’s imprimatur on the evidence? In the context of arbitration under international treaties involving sovereign states, should arbitral tribunals show deference to a sovereign state’s legitimate expectation of secrecy even after that secrecy has been breached by not publishing such evidence in their awards? Some might argue that arbitral tribunals should think twice before relying on such evidence. If so, then is a different level of deference due to the state’s interest for the state that is a party to the arbitration than is due to a third state that is not a party to the arbitration?
Tribunals have at their disposal the tools to balance such interests against the need for the evidence and its materiality. Article 9(2)(f) of the IBA Rules on the
Taking of Evidence in International Arbitration (2010) expressly empowers arbitral tribunals to “exclude from evidence or production any Document” on the “grounds of special political or institutional sensitivity (including evidence that has been 37 classified as secret by a government or a public international institution) that the
Arbitral Tribunal determines to be compelling[.]” It is worth bearing in mind that this provision was also found in the previous version of the IBA Rules. One tribunal, constituted under NAFTA, described the application of Article 9(2)(f) in the following terms:
[I]n view of an evolving jurisprudence constante by prior NAFTA tribunals, [] any refusal to produce documents based on their political or institutional sensitivity requires a balancing process, weighing, on the one hand, the compelling nature of the requested party’s asserted sensitivities and, on the other, the extent to which disclosure would advance the requesting party’s case.84
Many of the WikiLeaks cables were designated “secret” by the United States, and therefore satisfied the requirements of Article 9(2)(f). Yet despite the availability of tool like Article 9(2)(f) of the IBA Rules, one finds very few examples of their application in arbitrations in which the WikiLeaks cables were introduced as evidence.
As noted above, there are likely practical explanations as to why parties in those cases have not objected to the admissibility of the cables. But Article 9(2)(f) permits an arbitral tribunal to exclude such evidence “on its own motion”, and no tribunal appears to have raised state secrecy concerns on its on motion in cases involving the WikiLeaks cables. Modern information technology makes it seem
84. William Ralph Clayton, William Richard Clayton, Douglas Clayton, Daniel Clayton and Bilcon Delaware Inc. v. Government of Canada, PCA Case No. 2009-04, Procedural Order No. 13, 11 July 2012, ¶ 22. 38 inevitable that future tribunals will be called upon to evaluate classified evidence stolen from government servers, even if not called upon to consider the WikiLeaks cables themselves. One need only recall that Edward Snowden has leaked only a fraction of what he took.
Perhaps future tribunals, particularly in investment treaty cases, may make take the initiative to use provisions (like Article 9(2)(f)) that allow them to balance the competing interests of state secrecy and confidentiality against the evidence’s value in the resolution of the dispute. The three step analysis outlined above is offered as an example of how one might try to balance those competing interests.
There are surely other ways to go about it. But one can hope that tribunals that are confronted with such questions in the future will choose to offer more insight into how they reached the balance of interests than is currently found in the texts of investment treaty awards. Such transparency would be a most welcome development.
END ICSID Review, Vol. 30, No. 1 (2015), pp. 231–242 doi:10.1093/icsidreview/siu029 Published Advance Access December 22, 2014
NOTE The Admissibility of Evidence in ICSID Arbitration: Considering the Validity of WikiLeaks Cables as Evidence
Jessica O. Ireton1
Abstract—This article examines the admissibility of WikiLeaks diplomatic cables as evidence in international arbitral tribunals. Following the ICSID Tribunal’s recent Decision in ConocoPhillips v Venezuela, Venezuela challenged the Decision utilizing WikiLeaks diplomatic cables containing confidential communications between ConocoPhillips’ counsel and representatives from the US Embassy. This raises significant questions regarding what types of evidence are admissible in arbitral proceedings. Traditional international legal principles would point to such diplomatic communications being clearly inadmissible. However, the question is far less clear in a transnational arbitration, where the tribunal has the final authority over admitting evidence without being bound by international law. This article begins by considering the treatment of such evidence under international legal concepts and cases. It will then examine how such evidence has been treated by tribunals thus far within the developing transnational legal order. It will conclude by postulating how future ICSID tribunals might treat the admissibility and authenticity of WikiLeaks diplomatic cables.
I. INTRODUCTION On 3 September 2013, an International Centre for Settlement of Investment Disputes (ICSID) Tribunal rendered a decision in the long-running dispute between ConocoPhillips and the Republic of Venezuela over the expropriation of oil and gas assets under the Chavez regime.2 ConocoPhillips alleged that Venezuela illegally forced it to cede its majority holding in three joint oil and gas projects and was unwilling to negotiate a fair compensation for the government’s taking.3 After considering arguments by both parties, the Tribunal
1 Juris Doctor Candidate, University of Houston Law Center, Houston, Texas, USA. Email: joireton@cen- tral.uh.edu. My sincerest thanks go to Professor Julian Cardenas of the University of Houston Law Center for his mentorship throughout the writing of this article and for encouraging me to broaden my perspectives on international dispute resolution practices. Many thanks also to University of Houston Environment, Energy, and Natural Resources Center (EENR) for fostering international thought development on energy issues. 2 See ConocoPhillips Petrozuata BV, ConocoPhillips Hamaca BV and ConocoPhillips Gulf of Paria BV v Bolivarian Republic of Venezuela, ICSID Case No ARB/07/30, Decision on Jurisdiction and the Merits (3 September 2013). 3 ibid, para 212.
The Author 2014. Published by Oxford University Press on behalf of ICSID. All rights reserved. For permissions, please email: [email protected] 232 ICSID Review VOL. 30 found that Venezuela ‘breached its obligation to negotiate in good faith’ in order to reach an acceptable compensation settlement between the parties.4 Venezuela challenged this Decision, arguing that it participated in continuing negotiations and did not reach the egregious standard of bad faith.5 Counsel for Venezuela sent an open letter to the Tribunal on 8 September 2013 to support this contention.6 In presenting their arguments, however, Venezuela relied upon WikiLeaked diplomatic cables detailing confidential communications between ConocoPhillips’ counsel and representatives from the US Embassy. This raises significant questions regarding the type of information that can be submitted into evidence in a tribunal. The use of leaked diplomatic cables against the originating country seems contrary to common notions of international law; however, releasing such cables within the context of an arbitral tribunal raises a new question. A tribunal is theoretically in a ‘transnational’ rather than an international legal order;7 but transnational law development is in its early stages, having only really become a common method of global dispute resolution in the last twenty years.8 Should international law concepts, therefore, apply to the question of whether confidential and privileged cables can be utilized in a tribunal? Or should this decision serve as a next step in the progressive growth of a new transnational formulation? This article will begin with a consideration of the applicable international legal concepts and will be followed by an analysis of the transnational law developed in this area. It will then attempt to determine how an ICSID tribunal might treat the admissibility and authenticity of WikiLeaked diplomatic cables.
II. TRADITIONAL PERSPECTIVES: EVIDENCE UNDER THE INTERNATIONAL LENS Under traditional international law, the 1961 Vienna Convention on Diplomatic Relations and the 1963 Vienna Convention on Consular Relations govern the treatment of diplomatic and consular communications. Specifically, Article 27 of the Convention on Diplomatic Relations states that the communications of diplomatic missions are protected, while paragraph 2 reiterates that official correspondences are ‘inviolable’.9 These well-established rules, which govern the international order and the security of diplomatic relations, can be extrapolated to international tribunals, so as to prevent ‘overly zealous’ parties from improperly
4 ibid, para 404(d). 5 ConocoPhillips Petrozuata BV, ConocoPhillips Hamaca BV and ConocoPhillips Gulf of Paria BV v Bolivarian Republic of Venezuela, ICSID Case No ARB/07/30, Letter from Curtis, Mallet-Provost, Colt & Mosle, LLP (8 September 2013) 12. 6 Kyriaki Karadelis, ‘Venezuela Requests New Hearing in Conoco Case’, Latin Lawyer (20 September 2013),
10 Michael Reisman & Eric Freedman, ‘The Plaintiff’s Dilemma: Illegally Obtained Evidence and Admissibility in International Adjudication’ Yale Faculty Scholarship Series, 1982, 730 and 737. 11 ibid 738. 12 ibid 739–40. 13 ibid 741. 14 ibid 742–3 15 Corfu Channel Case (UK v Albania) (Merits) [1949] ICJ Rep 4 and 16. 16 ibid 6, 27, 51. 17 ibid 13; Reisman and Freedman (n 10) 745. 18 Reisman and Freedman (n 10) 746. 19 Corfu Channel (n 15) 35, 67. 234 ICSID Review VOL. 30
Kingdom and actually admitted the unlawfully obtained evidence.20 Based on the Corfu Channel case, unlawfully procured evidence may be admissible, even if the method of obtaining it is prohibited. The Corfu Channel case, however, was decided prior to the international regime for protection of diplomatic communications established by the Vienna Conventions on Diplomatic and Consular Relations. A second, contrasting example decided under these Conventions is the Iranian Hostages case. On 4 November 1979, the US Embassy in Tehran was overrun by militants, at which point the premises and all personnel, documents and archives were seized and taken hostage.21 The Iranian government took no steps to protect the diplomatic mission, in violation of both Vienna Conventions.22 The Convention on Diplomatic Relations sets out in Article 22 that ‘the receiving State is under a special duty to take all appropriate steps to protect the premises of the mission against intrusion or damage’.23 Articles 25–26 require the provision of a functional and secure foreign mission, as well as the protection of diplomatic personnel and official diplomatic commissions from any interference.24 Furthermore, Article 24, which provides that the archives and documents of the mission are to be treated as ‘inviolable’, and similar provisions of the Convention on Consular Relations, were also breached. The Iranian government argued that its actions were in response to years of oppression, exploitation and ‘numerous crimes perpetrated against the Iranian people’.25 In an argument similar to that of the United Kingdom in the Corfu Channel case, Iran claimed that the only evidence of the United States’ crimes was either located in the United States and inaccessible or contained within the documents seized in the US Embassy. Without immediate, albeit unlawful appropriation, these documents might be destroyed, leaving Iran with no evidence to prove its case. The Court rejected this self-help argument because the seizure of an embassy and its personnel was of such magnitude that the sanction of clearly unlawful activities would significantly disrupt not only US and Iranian relations, but could disrupt the entire world order. The Court therefore held that Iran’s unlawfully obtained evidence was inadmissible and that all documents and archives should be returned to the United States, unused.26 Even though similar arguments were put forth, the Iranian Hostages case was decided differently from the Corfu Channel case due to several aggravating factors, such as the seizure not only of documents, but also the personnel and premises of a diplomatic mission. It is uncertain whether a similar finding would have been made had the question concerned the use of unlawfully obtained evidence in a non-diplomatic setting. In this case, the Court’s decision centred more around the inviolability of diplomatic missions as they pertain to international relations, and the maintenance of a stable world order.27 The Court further distinguished
20 Reisman and Freedman (n 10) 747. 21 Case concerning the United States Diplomatic and Consular Staff in Tehran (Iran Hostages case) [1980] ICJ Rep 1, para 57. 22 ibid para 61–63. 23 ibid para 62; VCDR (n 9) para 22. 24 Iran Hostages case (n 21) para 62. 25 ibid para 81. 26 Reisman and Freedman (n 10) 749–51. 27 ibid 753. WINTER 2015 The Admissibility of Evidence in ICSID Arbitration 235 between private individuals violating diplomatic or consular immunities and this case, in which the government of Iran itself violated these privileges.28 In conclusion, international law under the Vienna Convention on Diplomatic Relations clearly states that diplomatic communications are protected and their confidentiality should be maintained by the host government. International courts have displayed a liberal bent toward the admissibility of evidence, even when unlawfully obtained, as seen in the Corfu Channel case. However, the Iranian Hostages case shows that the international community considers diplomatic and consular missions inviolable due to their significance to national and international security. This is especially true when a government actor such as Iran or Venezuela violates international law by unlawfully seizing or using another State’s protected information.
III. THE DEVELOPING TRANSNATIONAL PERSPECTIVE Tribunals rely on two distinctive tenets in their transnational practice, namely their broad discretion to determine the applicable law29 and to consider the admissi- bility of evidence.30 A practice of broad admissibility is reflected in many key international arbitral rules, such as the ICSID and the London Court of International Arbitration (LCIA) rules; however, these rules fail to address the question of privileged evidence expressly.31 Exceptions to this norm include ICSID Arbitration Rule 34(1), which stipulates that the tribunal ‘shall be the judge of the admissibility of any evidence adduced and its probative value’.32 The International Bar Association (IBA) Rules on the Taking of Evidence, which are increasingly gaining traction, also provide guidance.33 Article 9(2) addresses the admissibility of privileged evidence: 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: ... (b) legal impediment or privilege; ... (f) grounds of special political or institutional sensitivity (including evidence that has been classified as secret by a government or a public international institution).34 Through the use of ‘shall’ rather than ‘may’, the IBA Rules require a tribunal to weigh the value of privileged evidence and take into account materials of a secret or sensitive nature, such as those pertaining to government officials.
28 Iran Hostages case (n 21) para 92. 29 See Convention on the Settlement of Investment Disputes between States and Nationals of Other States (opened for signature 18 March 1965, entered into force 14 October 1966) (ICSID Convention) art 42; Rules of Arbitration of the International Chamber of Commerce (2012) (ICC Arbitration Rules) art 21; United Nations Commision on International Trade Law Rules (2010) (UNCITRAL Arbitration Rules) art 35. 30 George von Mehren and Claudia Salomon, ‘Submitting Evidence in an International Arbitration: The Common Lawyer’s Guide’ (2003) 20(3) J Intl Arb 285, 285. 31 ‘Privilege in International Arbitration’ Practical Law (2013)
Article 9(3) further provides that ‘the Arbitral Tribunal may take into account: ...(e) the need to maintain fairness and equality as between the Parties’.35 This section, however, does not mandate such consideration, but rather grants the tribunal discretion and authority to make the final decision regarding ‘the admissibility, materiality and weight of evidence’.36 Arbitrators, nevertheless, tend to err on the side of caution due to potential worries about their decisions being open to challenge or overturned under either the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (Washington Convention) or the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).37 A review of decisions provides relevant perspective as to how arbitral tribunals have interpreted the above rules and dealt with questions of privilege and confidentiality. Methanex Corporation v United States offers an initial view of how unlawfully obtained evidence will be treated in the transnational environment.38 Applying the United Nations Commission on International Trade Law (UNCITRAL) Rules, the Tribunal held that certain documents illegally obtained by Methanex to be inadmissible due to the corporation’s lack of good faith and procedural fairness in acquiring them.39 On 3 December 1999, Methanex brought a claim against the United States for USD 970 million in compensation due to losses incurred after the State of California banned the gasoline additive ‘MTBE’.40 Methanex then proceeded to unlawfully acquire the personal and business documents of the head of a lobbying organization with potentially relevant evidence by trespassing into his business office and sifting through internal trashcans and dumpsters.41 Based on these facts, the Tribunal held that Methanex acted in bad faith and failed to adhere to the principal of ‘equal treatment’ required by the UNCITRAL Rules.42 The Tribunal, however, relied upon principals of due process in international arbitration rather than focusing on the illegal collection of evidence, indicating that illegally obtained evidence might otherwise be admissible if it does not impinge upon a party’s right to due process. Another example involving the production of privileged documents is that of Tidewater Investment SRL and Tidewater Caribe, CA v Bolivarian Republic of Venezuela v Bolivarian Republic of Venezuela, in which Tidewater alleged that Venezuela unlawfully expropriated its maritime investments without compensa- tion.43 Both parties requested potentially privileged information from the opposing party to prove their case.44 The Tribunal relied on the IBA Rules, with a particular
35 ibid art 9(1) and (3). 36 ibid art 9(1). 37 ‘Privilege in International Arbitration’ (n 31) see, Convention on the Recognition and Enforcement of Foreign Arbitral Awards (signed 10 June 1958, entered into force 7 June 1959) (NY Convention) art V and ICSID Convention (n 29) art 52. 38 Methanex Corporation v United States of America, UNCITRAL, Motion of Respondent United States of America to Exclude Certain of Methanex’s Evidence (18 May 2004). 39 Methanex Corporation v United States of America, UNCITRAL, Final Award of the Tribunal on Jurisdiction and Merits (3 August 2005) Pt II, ch I, para 54. 40 ibid Pt I, Preface, para 1. 41 ibid Pt II, ch I, para 55. 42 ibid para 54. 43 Tidewater Investment SRL and Tidewater Caribe, CA v Bolivarian Republic of Venezuela, ICSID Case No ARB/10/5, Procedural Order No 1 on Production of Documents (29 March 2011) para 2. 44 See ibid paras 21 and 35. WINTER 2015 The Admissibility of Evidence in ICSID Arbitration 237 focus upon the Article (9)(2)(b) considerations surrounding privileged documents.45 In initiating its ICSID arbitration under the Barbados–Venezuela bilateral investment treaty (BIT), Tidewater relied on Article 22 of the Venezuelan Investment Law for consent to jurisdiction. Venezuela countered that Tidewater had formed a new corporate entity, Tidewater Investment SRL, solely for the purpose of utilizing the Barbados–Venezuela BIT.46 In order to prove its consent to jurisdiction, Tidewater requested that Venezuela produce ‘[a]ll documents related to meetings of the Consejo de Ministros and Gabinete Econo´mico at which the Investment Law was discussed.’47 Venezuela argued that these documents did not exist, but that even if they did, they would be privileged ministry documents.48 Because they were fundamental to the question of the ICSID Tribunal’s jurisdiction over the case, however, the Tribunal decided that Venezuela would have to attempt to find these documents.49 If any were privileged or otherwise excludable under IBA Rule 9, Venezuela had to identify them and provide their grounds for objection. This indicated a willingness on the part of the Tribunal to consider the admissibility of privileged documents; however, they had no opportunity to do so because Venezuela later responded that it had no such documentation.50 Venezuela also requested documents from Tidewater relating to the incorpor- ation of Tidewater Investment SRL.51 This request was for copies of any materials relating to the entity’s formation, to which Tidewater objected, claiming that these documents constituted privileged legal advice.52 The Tribunal held that these documents were nevertheless relevant and material due to Venezuela’s jurisdic- tional claims; therefore, the Tribunal asked Tidewater to prepare a schedule of all documents, labelling those which were privileged and the basis for privilege.53 Again, this left open the potential for the Tribunal to admit into evidence what at least one party considered privileged documents. However, following Tidewater’s provision of a detailed schedule, the tribunal held that these documents were in fact privileged and did not have to be turned over to Venezuela.54 The next case of Libananco Holdings v Republic of Turkey examined whether privileged information will be protected even if obtained through legal means. Libananco filed for ICSID arbitration in 2006, alleging that Turkey expropriated its power utility investments, resulting in USD 10 billion in losses.55 Libananco then requested Turkey’s exclusion from that particular phase of arbitration due to Turkish surveillance intercepting around 2 000 of the company’s privileged and/or confidential e-mails.56 Libananco claimed this was in violation of both the Energy
45 ibid para 33. 46 ibid paras 2–3. 47 ibid para 15. 48 ibid para 17. 49 ibid para 21. 50 Tidewater Investment SRL and Tidewater Caribe, CA v Bolivarian Republic of Venezuela, ICSID Case No ARB/10/5, Decision on Jurisdiction (8 February 2013) para 15. 51 Tidewater, Procedural Order No 1 (n 43) paras 22–3. 52 ibid paras 24 and 26. 53 ibid paras 35. 54 Tidewater, Decision on Jurisdiction (n 50) para 15. 55 ‘ICSID Arbitration Proceeds Despite Interception of Privileged Communications’ Practical Law (24 July 2008)
Charter Treaty and the ICSID Convention Rules; which required Turkey to arbitrate in good faith and comply with procedural fairness.57 Turkey countered that the surveillance was part of an effort to stop a major criminal laundering operation, therefore Libananco was not prejudiced in any way.58 Libananco responded that, regardless of Turkey’s intentions, their surveillance enabled them to observe privileged communications and breached the ‘equality of arms’ between the parties.59 The Tribunal weighed the importance of the Turkish government’s sovereign right to counter criminal activity against the ICSID arbitration principles of ‘procedural fairness, respect for confidentiality and legal privilege’.60 It refused to consider whether Libananco had in fact been prejudiced but decided that any evidence procured by Turkish surveillance should be excluded and further interception prohibited.61 Although the Tribunal did not exclude Turkey from the proceeding, it prohibited the entry of any such evidence, representing a firm stance toward the protection of privileged and confidential information on behalf of a party. In conclusion, the body of transnational law developed thus far and the practice of arbitration tribunals indicate that arbitrators have a broad power to determine the admissibility of privileged or confidential evidence. The IBA and UNCITRAL Rules provide guidance, stating that tribunals should take into account any sensitivity, legal impediments or privilege inherent in the materials presented in favour of one of the parties. Regardless of the legality or illegality of obtaining the evidence, a tribunal should analyse whether the proffered evidence violates the principles of due process in contravention of good faith, a party’s equal right of defence and the transnational public order.
IV. MISSED OPPORTUNITY: WIKILEAKS CABLES IN CONOCOPHILLIPS v VENEZUELA A new question regarding the admissibility of privileged and confidential evidence before an ICSID tribunal is that of US Embassy cables released by WikiLeaks. On 28 November 2010, WikiLeaks published 251 287 leaked US Eembassy cables, the largest set of confidential documents ever released into the public domain.62 This leak of diplomatic communications revealed sensitive information related to foreign investments worldwide, providing a veritable treasure trove of previously inaccessible evidence to investors and States alike. Going forward, States and foreign corporations may increasingly rely on WikiLeaks to support their arguments, raising a question as to whether State signatories of the Vienna Conventions are on a level playing field with non-signatory corporations in the production of such evidence. Furthermore, while the current release of informa- tion has primarily impacted US embassies, future leaks may increasingly affect other States. In a system of investment arbitration where parties and tribunals have
57 ibid para 44(c). 58 ibid paras 45–6. 59 ibid para 48(d). 60 ibid para 78. 61 ibid para 82(1.1.1–1.1.3) 62 ‘Secret US Embassy Cables’, WikiLeaks
63 Burlington Resources, Inc v Republic of Ecuador, ICSID Case No ARB/08/5, Decision on Liability (14 December 2012) para 221. 64 See Pierre Lalive, ‘L’ordre public transnational et l’arbitre international’ in Liber Fausto Pocar: Nouveaux instruments du droit international prive´, vol 2 (Giuffre` 2009) 599. 65 Burlington v Ecuador, Decision on Liability (n 62) paras 187 and 221. 66 ConocoPhillips Petrozuata BV, ConocoPhillips Hamaca BV and ConocoPhillips Gulf of Paria BV v Bolivarian Republic of Venezuela, ICSID Case No ARB/07/30, Decision on Respondent’s Request for Reconsideration, Dissenting Opinion of Georges Abi-Saab (10 March 2014) para 29. See also Yukos Universal Limited (Isle Of Man) v The Russian Federation, PCA Case No, AA 227, Final Award (18 July 2014) paras 1186, 1189. (Following submission of this Article to the ICSID Student Writing Competition, the Arbitral Tribunal in Yukos v the Russian Federation made an award of damages to Yukos in reliance on evidence in Wikileaks cables presented by the claimant. Surprisingly, the Tribunal did not address either the admissibility or authenticity of the cables, one of the main concerns studied in this article). 67 ConocoPhillips, Curtis Letter (n 5) 2. 68 ibid 4–8. 69 ibid 4 and 11–12. 70 ibid 13. 71 Conocophillips Petrozuata v Bolivarian Republic of Venezuela, ICSID Case No ARB/07/30, Decision on Respondent’s Request for Reconsideration, (10 March 2014) para 19. 72 ibid paras 20–1. 240 ICSID Review VOL. 30 has been rendered, not following an intermediate decision.73 The majority, therefore, held that it did not have the power to reconsider its 3 September decision.74 Conspicuously, the Tribunal failed to make any mention of the US diplomatic cables and their admissibility as evidence, but instead relied on the principal of res judicata.75 Two other ICSID tribunals provided with WikiLeaks evidence were similarly unwilling to comment on its propriety and admissibility. In OPIC Karimum Corporation v Venezuela, OPIC Karimum relied on WikiLeaks cables detailing Venezuelan government information to support its request to disqualify an arbitrator.76 The Tribunal made no mention of these cables, but rather lumped them in with all other evidence that ‘failed to establish’ the grounds for disqualification.77 Similarly, in Kılıc¸I˙ns aat I˙thalat I˙hracat Sanayi ve Ticaret Anonim S irketi v Turkmenistan, Kılıc¸ relied on WikiLeaks cables introduced by Turkmenistan to support its argument that recourse to Turkmenistan’s courts was futile.78 The State actor itself introduced the WikiLeaks evidence, but again, the tribunal failed to consider it, grouping these cables into the category of ‘broad statements and third party studies/reports’.79 The Tribunals did not reject the WikiLeaks cables in either case; they simply ignored them in their analysis of the evidence.80 The opposing parties also made no objections to their admission. Thus far, only ConocoPhillips has challenged the use of such cables, but since the tribunal majority denied the request for a new hearing, no decision was made regarding their admissibility. The only arbitrator willing to consider the admissibility of WikiLeaks cables has been Georges Abi-Saab in ConocoPhillips v Venezuela.81 In his dissent to the request for reconsideration, Abi-Saab argued that the presence of such significant information required reconsideration.82 The WikiLeaks cables point to a material factual error made by the Tribunal and ‘provide irrefutable evidence that the majority’s finding on good faith negotiations was wrong’.83 In a situation such as this, in which the Tribunal may have made a crucial factual error, the tribunal should err on the side of treating interlocutory opinions as open to reconsideration.84 Abi-Saab also argued that the majority improperly limited its consideration of Article 44 to determining whether the Tribunal had a general power of reconsideration rather than the ‘inherent jurisdiction or powers of any judicial or adjudicative organ’.85 This inherent jurisdiction requires a tribunal to
73 ibid para 22. 74 ibid para 24. 75 ibid para 21. 76 OPIC Karimum Corporation v Bolivarian Republic of Venezuela, ICSID Case No ARB/10/14, Decision on The Proposal to Disqualify Professor Philippe Sands (5 March 2011) paras 11 and 23. 77 ibid paras 56–7. 78 Kılıc¸I˙ns aat I˙thalat I˙hracat Sanayi ve Ticaret Anonim S irketi v Turkmenistan, ICSID Case No ARB/10/1, Award (2 July 2013) paras 4.1.1 and 4.3.16. 79 ibid paras 8.1.10 and 8.1.21. 80 See generally OPIC Karimum Corp (n 75), Kılıc¸ v Turkmenistan (n 77). 81 Matthew Weininger, ‘Apropos of ConocoPhillips v. Venezuela: Revision of Earlier Decisions in Fragmented Proceedings—A Matter of Principle?’ (Kluwer Arbitration Blog, 27 March 2014)
V. CONCLUSIONS AND RECOMMENDATIONS Following the Tribunal’s Decision in ConocoPhillips v Venezuela, Venezuela brought forth new evidence consisting of WikiLeaks cables originating in the US Embassy in Caracas. The use of these cables raises significant questions for arbitration tribunals, particularly whether privileged and confidential diplomatic communi- cations, which become publically available through illegal means, may be utilized as evidence in an arbitration proceeding. Under international law, the Vienna
86 ibid para 58. 87 ibid paras 56–9. 88 ibid para 64. 89 ibid para 21. 90 ConocoPhillips, Decision on Jurisdiction and the Merits (n 2) para 404(d). 242 ICSID Review VOL. 30
Conventions require diplomatic communications to be protected and respected by the host government. If a tribunal employed customary international legal concepts, they would likely find WikiLeaks cables inadmissible due to their violation of the diplomatic privilege. Under transnational law, a tribunal may leverage the IBA and other arbitration rules in deciding the admissibility and authenticity of WikiLeaks cables. Within this framework, however, tribunals attempt to bring some order to the transnational legal community by establishing a level of certainty for State and investor relations. They must, therefore, carefully consider new issues and attempt to draw conclusions as to what types of evidence will be allowed and what will be inadmissible. The Tribunal in ConocoPhillips v Venezuela had the opportunity to address and provide further clarity regarding the transnational community’s treatment of such evidence. Unfortunately, they chose to ignore the question, leaving the trans- national legal order unsettled. Nevertheless, the case law to date shows that the transnational legal order, while potentially achieving the same result, will approach cases very differently than the international or other legal orders. Although transnational law seeks to create a stable and predictable framework for arbitral decisions, it still grants tribunals broad powers to determine the applicable law and decide upon the admissibility of evidence in each case without being bound by this framework. The Law Applicable to Privilege Claims in International Arbitration
Diana Kuitkowski Author Diana Kuitkowski
(*) Jurisdiction Abstract Source Privilege issues often arise in international arbitration. Privilege determinations are of considerable importance as they have an Diana Kuitkowski, The impact on the availability and admissibility of evidence. However, Law Applicable to substantial uncertainty exists regarding the law applicable to Privilege Claims in privilege claims in international arbitration. This article examines the International legal issues relating to privilege claims in international arbitration. It Arbitration, Journal of also examines in detail what arbitrators should do when faced with International Arbitration, privilege claims and the various methods which have been (© Kluwer Law developed by tribunals to deal with difficult privilege issues. The International; Kluwer article advocates the development of privilege guidelines, which will Law International 2015, ensure greater certainty in this area, while preserving the flexibility of Volume 32 Issue 1) pp. the arbitral process. 65 - 106 1. INTRODUCTION
International arbitration is becoming increasingly popular as a means of commercial dispute resolution. In large part, this popularity can be attributed to the control and flexibility available to parties in tailoring the framework which will govern any potential dispute between them.(1) This flexibility extends to the rules of procedure, the seat of the arbitration, the arbitrators (their identity and qualifications) and the governing law.(2) However, areas of substantial uncertainty remain regarding the laws governing international arbitration. One such area is the issue of which law is applicable to privilege claims in international arbitration. Such uncertainty means that outcomes in relation to important evidentiary issues before arbitral tribunals are not always foreseeable. This uncertainty should be addressed if international arbitration is to be considered a predictable dispute resolution mechanism. Privilege issues often arise in international arbitration. Privilege determinations have an impact on the availability and admissibility of evidence, page "65" and therefore are of considerable importance. In practical terms, one of the most common areas of cross-cultural dispute in an arbitration is the issue of disclosure or production of documents or the release of information.(3) Indeed, ‘there is hardly an arbitration nowadays without a request for document production’.(4) Cross-cultural disputes arise in this area because international arbitration is very often at the crossroads of the common law and civil law traditions.(5) Parties frequently come from different cultures and their lawyers are often trained in the markedly different legal traditions of common and civil law. Parties often oppose document production on the basis of privilege.(6) However, their expectations of the nature of privilege and its scope will generally be based on their (or their lawyers’) own domestic legal system. The legal issues regarding privilege determinations in international arbitration are diverse, complex and often disputed due to several factors. First, the nature of evidentiary privileges varies between common law and civil law systems. Second, there are essential differences among legal systems in qualifying privileges as substantive or procedural. Third, there are no established conflict of laws rules for determining the law applicable to privilege claims in international arbitration. This article examines some of the legal issues relating to privilege claims in international arbitration. Part 2 introduces the terminology used in this area, as well as some of the types of privileges which exist. Part 3 then provides a comparative perspective of the different approaches to privilege claims, in particular as regards the differences between the common law and civil law approaches. Related to this comparative study is the question of whether privileges are procedural or substantive in nature. The answer to this question may have significant consequences for the law which may be applied to determine the validity and scope of a privilege claim. Part 4 considers the law applicable to privilege claims in international arbitration with regard to several factors. Most national arbitration laws and institutional rules are silent on the matter of privilege. Those laws or rules which do make reference to privilege do not do so in a way which would serve to provide any meaningful guidance on a determination of which law to apply to a privilege claim. Parties and arbitral tribunals are thus left with various potentially applicable laws and it is seldom clear which law should in fact be applied. In reality, unless the parties have chosen the law which is to apply to privilege claims page "66" (something which is very rare in practice), the tribunal will have a broad discretion to determine the applicable law. One of the principal considerations for a tribunal when determining the law applicable to a privilege claim will be the equality of the parties. However, this is not as simple as it first appears given that parties to an international arbitration are often from different jurisdictions which engender very different expectations as to how a particular privilege claim ought to be decided. The need for predictability and a concern for the legitimate expectations of the parties gives rise to ‘the increasingly familiar debate’ of whether uniform rules, guidelines or best practices are required for arbitrators when making determinations as to the law applicable to privilege claims in international arbitration, or whether arbitrators should make these determinations ad hoc in the exercise of their broad discretion.(7) Part 5 of this article, therefore, looks in detail at what arbitrators should do when faced with privilege claims. It examines the various methods which have been developed by tribunals to deal with difficult privilege issues. Among these are: the closest connection test, as well as the ‘most favoured nation’ and ‘least favoured nation’ rules, which seek to apply the law of the party which is either most protective of privilege or least protective, respectively. Despite the seeming simplicity of such approaches, it is difficult to apply them uniformly without giving due consideration to the particular circumstances of a given case. As such, there are also some commentators who favour the development of international best practice standards in this area. This latter suggestion advocates the development of guidelines which would bridge the gap between the various understandings of privilege, in particular between common law and civil law conceptions, in a manner similar to the IBA Rules on the Taking of Evidence in International Arbitration (‘IBA Evidence Rules’).(8) The main criticism levelled at any such attempts is that a formulation of uniform standards would inhibit party autonomy in selecting procedural rules and would thereby inhibit the flexibility of the arbitral process. While this criticism is not without merit, it is submitted that privilege guidelines, as opposed to specific rules, would preserve the flexibility of the arbitral process and would also assure the parties that decisions with respect to privilege are made in a principled fashion. page "67" 2. BACKGROUND, TERMINOLOGY AND TYPES OF PRIVILEGES
Before looking more closely at issues of the law applicable to privilege claims in international arbitration, it is necessary to understand what is meant by privileges in general, the rationale for privileges and what types of privileges exist.(9) 2.1. What is privilege?
A privilege is a right to withhold certain documentary or testimonial evidence from a legal proceeding. It is a legally recognised right and includes the right to prevent another from disclosing such information.(10) In all jurisdictions, whether developed through case law or statute, privileges have been formulated to reflect important public policy goals.(11) The fundamental underlying premise of privilege rules is that, in order to further certain interests, confidentiality or non-disclosure is seen to be more important than the truth-finding function.(12) While confidentiality is an essential precondition of privilege, it is necessary to distinguish between privilege and the duty of confidentiality, at least as it is understood by lawyers trained in common law systems. It is sometimes argued that privilege is a specific expression of the duty of confidentiality.(13) Indeed, in civil law systems, privilege is generally seen as falling within the duty of confidentiality.(14) Nevertheless, privilege does not extend to a duty to keep the proceedings, the award and any materials submitted in the course of proceedings confidential. The duty of confidentiality in its common law understanding is thus beyond the scope of this article. 2.2. Types of privileges
There are many different types of privileges. The following is a non- exhaustive list of some of the most commonly referenced and recognised privileges: page "68" (i) professional privileges, which include: – attorney-client privilege; – medical privilege; – journalists’ privilege; – accountant-client privilege; (ii) self-incrimination privilege; (iii) family testimony privilege; (iv) business secrets privilege; (v) settlement discussions – without prejudice privilege; (vi) government information privilege (including national security).(15)
Of the above-listed privileges, the ones most likely to arise in international arbitration are attorney-client privilege, business secrets privilege, without prejudice privilege and government information privilege. The focus of this article is the attorney-client privilege.(16) Depending on the jurisdiction, this is also known as the solicitor-client privilege,(17) legal professional privilege,(18) or client legal privilege.(19) These terms will be used interchangeably throughout this article. Legal professional privilege relates to communications between a lawyer and his/her client in the course of providing legal advice or communications in contemplation of legal proceedings.(20) This privilege is very widely accepted throughout many different legal systems.(21) Indeed, it would be difficult to conceive of a legal system involving professional representation which would function without such a privilege in place. Legal professional privilege is the most demonstrative of the issues associated with privilege claims in international arbitration and provides a paradigm example of the contrasting approaches of different jurisdictions. page "69" 3. A COMPARATIVE PERSPECTIVE: COMMON LAW VERSUS CIVIL LAW APPROACH TO PRIVILEGE
While the fundamental underlying principles of privileges are generally agreed across jurisdictions, there remains broad divergence as to their nature and scope.(22) There are often substantial differences in domestic laws on privileges. This is not surprising, given that privileges will depend on the particular jurisdiction’s evolution and the extent to which professional secrecy and confidence have been codified.(23) Furthermore, privileges reflect the comparative values of the professional bar and its clients.(24) Most legal systems recognise that if a lawyer improperly discloses communications which would be protected by the attorney-client privilege, that lawyer can be sanctioned under professional ethics rules.(25) Privileges can vary in many respects. In particular, there are significant differences in the recognised categories of privileges; the approach to waiver of privilege; the persons who have a right to invoke privilege (e.g., in-house counsel) and whether this extends to others from whom evidence is sought; and the substantive scope of privilege coverage.(26) While each jurisdiction is likely to have its own distinct law governing legal professional privilege claims, it is useful to examine some of the differences across common law and civil law jurisdictions. The following part of this article draws a broad comparison between common law and civil law approaches to privilege issues. It is important to note, however, that such a comparison has obvious limitations because differences exist between particular jurisdictions within both systems.(27) As long as such limitations are acknowledged, it is submitted that a broad comparative study is useful in order to demonstrate some of the fundamental differences of approach which can exist in two distinct legal traditions and what these differences mean in terms of potential consequences for parties to an international arbitration. Of particular interest in this regard are the differences between the applicability of attorney-client privilege where in-house counsel is involved. These differences will be examined in further detail below. page "70" 3.1. Common law
The attorney-client privilege in common law systems generally is intended to foster open and uninhibited communications between a client and his/her lawyer by providing that such communications are protected from disclosure. The attorney-client privilege is also seen to be a right which can only be waived by the client.(28) There is some controversy as to whether there can be an inadvertent waiver of privilege, where privileged documents have been included in the production of non-privileged documents by mistake.(29) In the United States, documents and communications exchanged between a lawyer and his/her client for the purpose of seeking legal advice will be privileged.(30) A separate privilege – the ‘attorney work product’ doctrine – also attaches in the United States to documents created by, or on behalf of, lawyers in the context of investigations, or contacts with third parties, such as witnesses or experts, where the documents have been created during or in anticipation of litigation.(31) In England, the law recognises two types of evidentiary privileges relating to lawyers. Von Schlabrendorff and Sheppard provide a concise summary of the operation of these privileges as follows:
(a) ‘legal advice privilege’: communications made between a legal advisor and his client are protected from disclosure if such communications are made for the purpose of obtaining or giving legal advice; (b) ‘litigation privilege’: communications between a legal advisor and his client and third parties are also privileged, once litigation is contemplated, or has been commenced, and where the communication has been created in relation to that litigation for the purpose of obtaining or giving advice or collecting evidence.(32)
Substantially similar privilege provisions exist in Australian law.(33) The traditional view in common law jurisdictions was that a client’s communication with a third party could only be privileged if it was made for the page "71" purpose of litigation or in anticipation thereof.(34) The exception to this was where the third party was the client’s ‘agent’ in making the communication with the lawyer.(35) In Australia, privilege can now also attach to documents prepared by a third party at a client’s request if they were prepared for the dominant purpose of the client obtaining legal advice.(36) The focus is therefore on the nature and purpose of the work that the third party has undertaken.(37) In terms of expert witnesses, communications between the expert and the legal advisors or the client will attract legal professional privilege, while associated documents such as drafts, memoranda and notes prepared by the expert may not.(38) The situation regarding experts is broadly similar in England.(39) As mentioned above, one of the more controversial areas concerns the question of whether the attorney-client privilege covers communications with in-house counsel. In general, it appears that all common law jurisdictions, including for example, the United States, Australia and Canada,(40) extend the attorney-client privilege to in-house counsel.(41) The main limitation on this is the requirement that the relevant communication must relate to legal advice as opposed to advice on general business matters, and that the in-house counsel is independent from the client.(42) Interestingly, in Aquila Coal Pty. Ltd. v. Bowen Central Coal Pty. Ltd.,(43) the Supreme Court of Queensland held that legal advice provided by a foreign lawyer in his/her role as in-house counsel can be protected by legal professional privilege in Australia. Thus, even if the in-house counsel is not admitted to practice in Australia, his/her legal advice will be protected by privilege when: the advice is confidential; is made for the dominant purpose of obtaining or giving legal advice or to conduct or aid in the conduct of litigation; and when the lawyer in question page "72" is independent. A similar result was reached in the United States in Renfield Corp. v. E Remy Martin & Co. S.A.,(44) where privilege was applied under US law because French in-house counsel, although not members of a bar, were held to be the functional equivalent of US lawyers as they were competent to give legal advice and permitted by law to do so. However, this decision has not always been followed and other courts in the United States have held that communications with foreign in-house counsel are only privileged where the parties have a reasonable expectation of confidentiality under the foreign country’s privilege laws.(45) 3.2. Civil law
In civil law systems, where the notion of compulsory document disclosure is severely limited compared to common law systems, the concept of privilege has developed differently.(46) Unlike in common law systems, the attorney-client privilege in civil law countries generally exists as a product of the criminal law and ethics rules which serve to protect ‘professional secrets’.(47) This obligation to protect professional secrets has a dual character: it is both a right and a duty belonging to the lawyer. It is considered to be a matter of public order. Accordingly, in several civil law jurisdictions, it is argued that the client does not have the power to waive the privilege.(48) An interesting example of the practical effect of this civil law conception of privilege can be seen in Swiss law, where a document prepared by a lawyer, containing confidential information, will not be privileged if it is in the client’s possession.(49) Under EU law, current privilege rules date from the judgment in AM & S Europe Ltd. v. European Commission.(50) In effect, written communications will be privileged if they are made between a company and an independent lawyer who is qualified to practice in the European Union.(51) The European Court of Justice noted that an independent lawyer is someone who is not bound to the client by a page "73" relationship of employment. The communications must be made for the purpose of and in the interest of the company’s rights of defence in relation to Commission proceedings.(52) Protection from disclosure applies in relation to correspondence between the lawyer and client during the investigation phase, as well as in relation to correspondence exchanged prior to the investigation if this correspondence has a relationship to the subject matter of the investigation.(53) The AM & S decision provoked substantial controversy as regards its exclusion of in-house counsel and non-EU lawyers.(54) It has since been confirmed that if an in-house counsel is simply reporting the content or text of legally privileged communications made by an external, EU-qualified lawyer, then this report will also be privileged.(55) However, the privilege will be lost if the in-house counsel amends the advice, including by adding his/her opinion.(56) Essentially, under the AM & S test, even an external, independent counsel, not qualified in the EU, will not be covered.(57) The personal scope of legal professional privilege in EU law was brought into question again in Akzo Nobel Chemicals Ltd. & Akros Chemicals Ltd. v. European Commission, where the General Court refused to extend the scope of the privilege’s application to in-house counsel.(58) The European Court of Justice has confirmed this refusal on appeal.(59) The Court held that in-house lawyers must be distinguished from external lawyers because they ‘are clearly in very different situations, owing, in particular, to the functional, structural and hierarchical integration of in-house lawyers within the companies that employ them’.(60) The Court further found, and this was largely confirmed on appeal, that: an examination of the laws of the Member States shows that, even though...specific recognition of the role of in-house lawyers and the protection of communications with such lawyers under LPP [legal professional privilege] is relatively more common today than when the judgment in AM & S was handed down, it is not possible, nevertheless, to identify tendencies which are uniform or have clear majority support in that regard in the laws of the Member States.(61) page "74" Thus, it would seem that only a de jure and de facto qualification of in-house lawyers as independent at the national level is likely to change the Court’s restrictive approach to in-house lawyers in the context of legal privilege.(62) Civil law is not monolithic and varies from country to country.(63) Nevertheless, at the date of writing, many civil law jurisdictions, including France, Switzerland, Italy and Sweden maintain that in- house counsel are not independent enough of their employers to be covered by privilege rules.(64) 3.3. Why do these differences matter? Having examined some of the differences in approach to privilege between common law and civil law jurisdictions, the question then arises: why do these differences matter in the context of international arbitration? Indeed, depending on the circumstances of the arbitration, including the nature of the dispute, and the identity of the parties, their counsel and the members of the tribunal, issues regarding privilege and protection from disclosure might never arise.(65) Even if privilege issues do arise, the parties or their counsel may be from the same or similar jurisdictions, and thus may share a common approach to privilege, meaning that their expectations regarding privilege will be substantially similar.(66) In such cases, the tribunal will not have much difficulty in determining the rules that are to apply to the privilege claims in question. The problems typically begin where the parties or their counsel are from different jurisdictions and have different expectations as regards the rules which should apply to their privilege claims. Considering that multinational corporations and individuals with cross-border business are operating within an increasingly global corporate and investment environment,(67) their disputes are also increasingly likely to involve more international elements. Therefore, this latter situation appears to be progressively more common. According to Rubinstein and Guerrina, ‘[u]nder the present system, parties and their counsel proceed at their peril if they assume that page "75" certain documents, communications and secrets will be protected from disclosure’.(68) To take an example of a hypothetical situation which might arise: assume that there is an arbitration seated in China between a US company and a French company, where both parties have obtained extensive legal advice in relation to the arbitral proceedings from their in-house counsel. The US company expects that communications with its in-house counsel will be protected from disclosure by virtue of the attorney-client privilege, while the French company expects that such communications will not be protected from disclosure. If the French company makes a valid request to produce certain documents created by the US company’s in-house counsel, the US company is likely to resist production on the basis that the documents are privileged. Depending on the approach taken by the arbitrators in respect of this privilege claim, there is clear potential for the parties to be taken by surprise. If the arbitrators apply the relevant US state law to the privilege claim(69) and deny the request to produce, the French party’s expectations will be disappointed. If, on the other hand, the arbitrators apply French law to the privilege claim and uphold the request to produce, the US party’s expectations will be disappointed. If the arbitrators apply the law of the seat to the privilege claim, it is possible that neither party’s expectations will be met. In the example set out above, it is clear that parties who enter into international arbitration agreements must take precautions as to the role that their in-house counsel take in the arbitration and, in particular, what they put in writing. Otherwise, they run the risk that written communications, which they never expected to be produced, may find their way into the hands of the other side. Furthermore, additional issues may arise if the tribunal does not make a determination as to which law it will apply to any potential privilege claims at the outset of the arbitration. Assuming that the tribunal in the above example decides to deal with privilege issues as and when they arise, a situation may occur in which the French party discloses certain documents prepared by its client’s in-house counsel in the belief that these documents are not privileged. When the French party requests documents prepared by the US party’s in- house counsel, it is likely that this request will be met with an objection on grounds of privilege. The page "76" US party will expect that these documents will be protected by legal privilege. The French party, on the other hand, will expect that these documents are not privileged. The tribunal will be in a difficult position: if it orders disclosure of the documents, it will frustrate the US party’s expectations; if it upholds the privilege objection, it will frustrate the French party’s expectations, in particular because the latter has already disclosed documents which could have remained undisclosed. This example clearly shows that it is preferable for a tribunal to make a determination as to the law it will apply to privilege claims before the proceedings have commenced. The timing of an arbitral tribunal’s applicable law determination will be discussed further at section 5.6 below. Finally, Alvarez sets out an interesting scenario which can often arise in relation to large infrastructure projects, where one or both of the parties involved in an arbitration is a consortium made up of several entities from different countries.(70) The performance of the project may be spread across various jurisdictions. For example, the engineering and design is to be carried out in one country, the procurement of equipment in another and the construction of the project itself in another country again. Legal advice in respect of each of these project components may be sought and provided in different jurisdictions by lawyers (and potentially in-house counsel) who are qualified in different jurisdictions. Given the diversity of national rules on privileges and the diversity of jurisdictions which may be involved in the above scenario, it is easy to imagine conflicts between the possible laws which may apply to any privilege claims raised during the course of the arbitration.(71) 4. WHICH LAW SHOULD APPLY TO PRIVILEGE CLAIMS IN INTERNATIONAL ARBITRATION?
There is limited authority on the appropriate treatment of privileges in international arbitration.(72) Indeed, it has been said that ‘international arbitral tribunals cannot expect much guidance...from international sources’.(73) According to Born, this lack of authority is ‘both unfortunate and remarkable’, particularly given the frequency with which issues of privilege arise.(74) In addition, page "77" there have recently been significant increases in challenges to privilege assertions,(75) which highlight the need for further guidance in this area. This part looks at the current national laws on international arbitration as well as institutional rules in order to discern how much assistance parties and arbitrators can expect from the existing laws and rules. The short answer to this is very little. However, privileges are widely recognised by international arbitral tribunals. Accordingly, issues of characterisation are examined in order to determine whether privilege is a matter of substance or procedure. Finally, this part explores some of the laws which are potentially applicable to privilege claims in international arbitration, based on either a procedural or substantive characterisation of privilege. 4.1. Arbitration laws and institutional rules
Interestingly, almost all national laws and institutional rules give arbitral tribunals the power to decide procedural and evidentiary matters for themselves. However, there is very limited express guidance on the exercise of arbitrator discretion regarding privilege issues.(76) Most national arbitration laws are silent on questions of privilege.(77) The United Nations Commission on International Trade Law (UNCITRAL) Model Law does not address the treatment of privilege issues. It confirms only that the tribunal has a general power to conduct the proceedings as it sees fit, and that this includes ‘the power to determine the admissibility, relevance, materiality and weight of any evidence’.(78) Other arbitration legislation likewise does not address the subject.(79) To use the English Arbitration Act 1996 as an example, section 34(1) provides: ‘[i]t shall be for the tribunal to decide all procedural and evidential matters, subject to the right of the parties to agree any matter’. Like the UNCITRAL Model Law, it also gives tribunals seated in England the more specific power to decide ‘whether to apply strict rules of evidence (or any other page "78" rules) as to the admissibility...of any material (oral, written or other)’.(80) One of the peculiarities of the English Arbitration Act is that it addresses document production more directly than other national arbitration statutes.(81) This is perhaps unsurprising given that England is a jurisdiction familiar with disputes concerning document production generally, and privilege more specifically.(82) Under the English Arbitration Act, the tribunal has the power to decide ‘whether any and if so which documents or classes of documents should be disclosed between and produced by the parties’.(83) However, no further guidance is given as to how a tribunal is to decide on document production issues and, more specifically, no further guidance is given as to which law a tribunal should apply where a party resists production on the basis of privilege. While all major institutional arbitration rules contain general choice of law provisions regarding the subject matter of the arbitration, they too remain silent on the law applicable to privilege claims.(84) For example, the UNCITRAL, International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA) and International Centre for Settlement of Investment Disputes (ICSID) Rules do not make reference to privilege claims.(85) The ICC Rules give the tribunal a general discretion to determine the rules governing the proceedings, ‘whether or not reference is thereby made to the rules of procedure of a national law to be applied to the arbitration’.(86) This general discretion is informed by the tribunal’s duty to ‘act fairly and impartially and ensure that each party has a reasonable opportunity to present its case’.(87) The ICC Rules also allow a tribunal to ‘take measures for protecting trade secrets and confidential information’,(88) but this is a reference to commercial confidence and not legal privilege.(89) The LCIA Rules similarly set out a general duty of the tribunal ‘to act fairly and impartially as between all parties, giving each a reasonable opportunity of putting its case and dealing with that of its opponent’.(90) In addition, the LCIA Rules expressly deal with evidence and give the tribunal the power: page "79" to decide whether or not to apply any strict rules of evidence (or any other rules) as to the admissibility, relevance or weight of any material tendered by a party on any matter of fact or expert opinion…(91) Although this provision deals with evidence more expressly, it does not give any guidance as to how a tribunal should approach questions of privilege. An exception to the general silence of institutional rules regarding privilege may be found in the International Centre for Dispute Resolution (ICDR)(92) Arbitration Rules, Article 20.6 of which provides that ‘[t]he tribunal shall take into account applicable principles of legal privilege, such as those involving the confidentiality of communications between a lawyer and client’.(93) Similarly, Article 9(2)(b) of the IBA Evidence Rules provides that a tribunal may exclude any document, statement, oral testimony or inspection from evidence or production because of a ‘legal impediment or privilege under the legal or ethical rules determined by the Arbitral Tribunal to be applicable’.(94) Although the aforementioned provisions make express mention of privilege, they remain silent on the approach which tribunals ought to take in determining the law applicable to privilege claims. The above is not intended to be an exhaustive consideration of relevant national arbitration laws and institutional rules. Rather, it is intended to show that these laws and rules hint at the significance of privilege in the arbitral process, but deliberately steer clear of defining the scope and application of the various formulations of privilege which may arise.(95) It is clear that determining privilege issues generally falls within the tribunal’s mandate.(96) However, there are no established choice of law rules governing the determination of the law or rules applicable to privileges in international arbitration.(97) 4.2. Are privileges recognised in international arbitration?
Despite the silence of laws and rules in this area, arbitral tribunals are almost uniform in their recognition of parties’ rights to rely on evidentiary privileges.(98) page "80" Such recognition is consistent with the general principle that, unless the parties have agreed otherwise, a tribunal will give effect to the parties’ legal rights under the applicable law.(99) National courts have also generally assumed that privileges which would otherwise be applicable in civil litigation are not affected by the parties’ agreement to arbitrate or by the fact that an arbitral tribunal (not a court) has made the decision on disclosure.(100) Thus, there appears to be a general consensus that an agreement to arbitrate does not constitute a waiver of privilege.(101) In fact, it has been argued that such a theory would necessarily be misconceived because privileges are like other substantive legal rights(102) which, unless otherwise agreed by the parties, are to be given full effect in the arbitral process.(103) In addition, it is submitted that it would be plainly wrong as a matter of principle for an arbitral tribunal to disregard privilege rules and order the production of privileged documents.(104) As Judge Brower has aptly stated: courts likely are more inclined to set aside awards where arbitrators have refused to recognize and protect privileges than they are in circumstances where arbitrators have excluded evidence on the basis of privilege.(105) Therefore, unless the parties have expressly waived them, privileges available in litigation should also be applicable in arbitration.(106) Decisions on privilege page "81" issues are for the tribunal to resolve and are subject to limited review by domestic courts in annulment proceedings.(107) 4.3. Characterisation of privilege: is privilege a matter of substance or procedure? The first step in any conflict of laws process is the characterisation or qualification of the relevant issue.(108) The principal qualification issue in international arbitration differs from that in the domestic context: it is not whether the relevant issues, categories or laws ought to be characterised on the basis of domestic or foreign law, but rather how such qualifications ought to be made in a situation where the law of the seat is only one among many applicable laws.(109) A tribunal’s decision on privilege may be influenced by whether privilege is considered procedural or substantive.(110) A preliminary difficulty is that it is not easy to qualify privilege as either procedural or substantive. This can be illustrated by comparing rules of evidence with rules of privilege. There are close links between rules of evidence and rules of privilege, because the latter necessarily impact on the operation of the former. Rules of evidence are generally seen as related to the need for, or the probative value of, certain information or testimony. They are concerned with ascertaining the truth in a given case. Rules of evidence are usually considered as procedural in nature and therefore, in international arbitration, are subject to the arbitrator’s discretion as regards procedural matters and any mandatory rules in the arbitration law of the seat.(111) Rules of privilege, on the other hand, are not concerned with ascertaining the truth: quite the opposite in fact. Privileges exist to limit disclosure so as to protect certain interests or relationships and thereby to advance public policy aims.(112) Thus, rules of privilege cannot be so neatly characterised as either procedural or substantive in nature. Here again, there is a difference between common law and civil law perceptions. Most common law jurisdictions qualify privileges as a matter of substantive law.(113) For example, the High Court of Australia has recognised client legal privilege as a doctrine of substantive law, which is not easily displaced except page "82" by clear legislative intent.(114) Likewise, the Supreme Court of Canada has stated that there exists a substantive rule of privilege, as distinct from the evidentiary rule applying in court proceedings.(115) The New Zealand Court of Appeal has also described legal professional privilege as a substantive right, founded on an important public policy.(116) The English House of Lords has considered legal professional privilege as substantive in that it is ‘a fundamental human right long established in the common law’.(117) Finally, US federal law also considers privilege law as substantive.(118) Civil law jurisdictions, on the other hand, tend to qualify privileges as a procedural issue.(119) The fact that privileges are contained in the procedural codes of many civil law jurisdictions points to the qualification of privilege as a matter of procedure.(120) Given the marked differences in approach above, the question remains as to which rules an international arbitral tribunal is to apply in characterising privileges. It is submitted that there are three basic premises which need to be taken into account. First, it is generally acknowledged that an international arbitral tribunal does not have a lex fori.(121) Thus, a tribunal is not obliged to apply the general conflict of laws rules which the courts at the seat of the arbitration have to apply. Second, because the characterisation process is said to be of an inherently comparative nature, international arbitral tribunals are generally inclined (and page "83" entitled) to use a comparative approach when dealing with choice of law issues.(122) Third, in making choice of law decisions, tribunals should take into account the legitimate expectations of the parties.(123) The better view is that a comparative qualification of evidentiary privileges leads to the conclusion that privilege issues are of a substantive nature. Several courts and commentators take this view on the basis of the public policy judgments underlying evidentiary privileges.(124) For example, in R. v. Derby Magistrates Court, the House of Lords, in presenting a vivid and succinct history of the concept of privilege in English law, stated: Legal professional privilege is...much more than an ordinary rule of evidence, limited in its application to the facts of a particular case. It is a fundamental condition on which the administration of justice as a whole rests.(125) Likewise, the comments of Advocate General Slynn in the AM & S case tend towards the same conclusion: [the attorney-client privilege] springs essentially from the basic need of a man in a civilised society to be able to turn to his lawyer for advice and help, and if proceedings begin, for representation.(126) Berger argues that these judgments often relate to the value of certain kinds of communications or information from a public policy perspective.(127) He contends that such judgments are substantive in nature because of their underlying public policy objectives and that this is so despite their inclusion in procedural law in some jurisdictions.(128) The important thing, therefore, is to focus on the value of the communication or information. This engenders a substantive qualification regardless of whether the privilege is perceived as the client’s right (as in common law) or the lawyer’s right (as in civil law).(129) The differences between considering privilege as a matter of procedure or as a matter of substance are of substantial practical importance in the context of international arbitration. This is because there are different laws applicable to privilege claims, depending on whether privilege is a procedural or a substantive issue. If privilege is a matter of procedure, then an arbitral tribunal might be page "84" inclined to follow the privilege rules of the law applicable to the arbitral procedure.(130) Given that the vast majority of modern national arbitration laws favour the territorial theory as regards the law applicable to the procedure, the applicable law would be the law of the seat of the arbitration.(131) However, if privilege is a matter of substance, an arbitral tribunal would be compelled to apply the general choice of law rules set out in the applicable national arbitration law.(132) There are problems with both approaches. In the former, by applying the law of the seat, a tribunal is likely to ignore the legitimate expectations of the parties.(133) The seat is generally acknowledged to provide the formal legal domicile of the arbitration and is often chosen for its neutrality and convenience.(134) Not infrequently, the hearings and evidence-taking processes are conducted elsewhere.(135) As such, the law of the seat often has little, if any, connection with the parties and their counsel.(136) Indeed, in the context of privilege, the relevant communication will usually have taken place in a different jurisdiction, long before the arbitration was commenced. Therefore, applying the law of the seat to privilege claims would be an unsatisfactory solution and would usually be against the legitimate expectations of the parties, especially where the seat is not chosen by the parties, but by the arbitral tribunal or institution. The alternative approach represents an equally unsatisfactory solution for different reasons. By applying general choice of law rules contained in the applicable arbitration law to determine the law applicable to privilege issues, a tribunal is likely to run afoul of the fundamental principle of equality of the parties.(137) This is because such an approach can lead to the application of different laws to each party, containing different privilege standards.(138) Therefore, despite the strong arguments in favour of the qualification of privilege as a matter of substance, a strict conflict of laws approach is not an page "85" adequate or appropriate solution for tribunals to use when determining privilege claims.(139) This will be discussed in more detail at section 5.2 below. 4.4. Potentially applicable laws
As set out at section 4.2 above, it may reasonably be assumed that privileges can be asserted in international arbitration. The obvious question then arising is which law governs the existence and scope of an asserted privilege.(140) As shown at section 4.1 above, there are no established choice of law rules governing the determination of the law applicable to privileges in international arbitration. Furthermore, as explained at section 4.3 above, neither a procedural nor a substantive qualification of privilege provides a satisfactory approach for tribunals to follow in making privilege determinations. Given the significant differences in the nature and scope of privileges under different national laws,(141) choice of law disputes will often arise regarding the existence and contents of privileges in international arbitration. 4.4[a]. Choice of Law by the Parties
If the parties have chosen the law which is to apply to a particular issue, then the tribunal must apply the law chosen.(142) However, in practice it will be very rare for parties to have chosen the law that is to apply to potential privilege claims.(143) The usual choice of law clause in the underlying contract will virtually never pertain to evidentiary privileges. Rather, the choice of law clause is generally taken to stipulate the substantive law which will govern the parties’ rights and obligations under their contract.(144) Unless the law specified in the choice of law clause overlaps with the procedural law of the seat of the arbitration, it will generally be put to one side for the purpose of privilege questions.(145) The question then arises as to whether the choice of law clause should be extended to include evidentiary privileges. Parties generally do not turn their minds to these issues when they are negotiating the contract.(146) Furthermore, the allegedly privileged communication or information will often have taken place in page "86" a different jurisdiction to the one chosen by the parties to govern their contract. For both of these reasons, the choice of law clause agreed by the parties should not be extended to cover privilege issues. 4.4[b]. Possible Choices of Law Open to Tribunals
Assuming that there is no express choice of law by the parties to govern privilege claims, it is necessary to look at other possible choices of law open to tribunals. In any given arbitration, there are several laws which may be applicable to the determination of a legal privilege claim. Sindler and Wüstemann provide a useful list of the potentially applicable laws, which include: - the law of the contract; - the law of the seat of the arbitration (lex arbitri); - the law of the jurisdiction where the party claiming the privilege resides; - the law of the jurisdiction where the lawyer claiming the privilege resides; - the law of the place where the communication/information was created; - the law of the place where the lawyer with whom the communication took place is admitted; - the law of the jurisdiction where enforcement of the award will be sought; - general principles, without reference to any national law. (147)
As can readily be observed, this is an extensive list of options. In determining the applicable law from the above options, a tribunal’s decision will unavoidably contain a ‘certain degree of arbitrariness and subjectivity’, which will make it difficult for the parties to predict the applicable law with any certainty.(148) 5. WHAT SHOULD INTERNATIONAL ARBITRAL TRIBUNALS DO?
While there appears to be agreement that there are no strict rules of privilege which would apply in international arbitration, there does not appear to be agreement as to what standards do apply. There is no one solution and very little precedent can be found. Furthermore, privilege issues will usually need to be determined by an arbitral tribunal long after the relevant communications were made or the relevant information was created.(149) Thus far, this article has presented the significant problems in determining the law applicable to privilege claims in international arbitration. This part looks at page "87" some of the possible solutions and attempts to answer the ambitious question: what should tribunals do when faced with privilege claims? It is, however, important to note at the outset that there is no ‘one size fits all’ approach and that none of the possible options represent an entirely satisfactory solution. Rather, as some commentators have rightly identified, they ‘tend to involve an element of “trade-off” between their theoretical rigour, efficacy, and considerations of fair dealing’.(150) 5.1. Practical considerations in determining the applicable law: equality and fairness
There are always at least two parties in an international arbitration. Depending on their legal backgrounds, these parties may have relied on very different notions of privilege with different standards of protection. As a result, any privilege claims made by the parties will need to be considered in light of the fundamental need to preserve the equality of the parties. It is submitted that an arbitral tribunal faced with a claim for privilege will need to take into account the parties’ legitimate expectations.(151) Parties generally expect that privilege will continue to apply if the communication or information was protected by privilege when it was made.(152) Parties also expect that the same privilege rules will apply to them, regardless of the particular dispute resolution mechanism they have chosen.(153) In other words, parties would not expect different privilege rules to apply to their communications or information just because they have chosen to submit a potential dispute to arbitration as opposed to domestic litigation. As has been discussed at section 2.1 above, there are important public policy reasons why privileges exist and, therefore, why parties should legitimately expect to rely on them. Thus, by applying the fundamental principles of equal treatment and reasonable opportunity for each party to present its case, the expectations of the parties in relation to privilege claims are elevated to the level of ‘legitimate expectations’.(154) Indeed, some commentators argue that the need to give effect to the parties’ legitimate expectations forms a general principle of private international law.(155) page "88" If, during the course of an arbitration, the arbitrators apply different privilege rules than what the parties expected, parties and their counsel may be placed in the position of having to disclose information that they reasonably expected was protected at the time of the communication. The parties may discover that their arbitration agreement could have the effect of imposing on them a general obligation to disclose all relevant documents, including pre- arbitration documents and legal advice which would not be subject to disclosure under their domestic privilege rules.(156) It would be a significant understatement to say that the parties would be surprised by such a turn of events. These are important considerations for all of the participants in international arbitration. Entities and individuals conducting cross- border business ought to be able to ascertain the risks of conducting their business.(157) This includes the risk that communications with their lawyers will potentially need to be disclosed where, in their domestic systems, they would be protected by privilege. Legal advice which is protected by privilege in the jurisdiction in which it is given may not be privileged everywhere an entity operates or everywhere that the advice is intended to be received.(158) Clients and users of international arbitration want a predictable dispute resolution mechanism.(159) However, a tribunal’s application of privileges can be very uncertain. The protection of parties’ reliance interests with regard to privilege is closely related to meeting the parties’ legitimate expectations.(160) Given that ‘[p]arties rely on privileges’,(161) it is preferable for an arbitral tribunal to avoid surprising the parties where the parties have relied on certain minimum standards of protection. It is important to keep in mind that a ‘trial by ambush’ need not only arise as a result of the other side’s actions, but can also arise as a result of the tribunal’s directions.(162) From an arbitral tribunal’s perspective, the tribunal will want to avoid surprising the parties because it will want to render an enforceable award. Arbitrators have a best efforts obligation to render an enforceable award(163) and will therefore be mindful of challenges to their awards.(164) In the context of privilege claims, such challenges will most obviously arise on grounds of procedural page "89" irregularity(165) or on the basis of a failure by the tribunal to act fairly and give the parties a reasonable opportunity to present their case.(166) As stated by Professor Park, ‘[g]iving one side a stark procedural handicap is an excellent way to invite challenge to an award’.(167) Subsequently, in enforcement proceedings, the award should not be open to challenge, for example, under Article V of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the ‘New York Convention’).(168) In particular, this means that arbitrators need to ensure that due process requirements are followed.(169) The most important aspect of the due process requirement is that the tribunal must ensure the equality of the parties in that each party is treated equally and is given a fair and equal opportunity to be heard and to present its case.(170) In fact, the fundamental rights of the parties to be heard and to be treated equally have sometimes been termed the ‘Magna Carta’ of arbitral procedure.(171) Accordingly, arbitrators must take this into account when making privilege determinations so as to avoid putting their awards at risk. Any useful discussion regarding the law applicable to privilege claims in international arbitration must take into account the considerations set out above. If a tribunal applies different privilege standards to each party in a dispute, it may risk exposing its final award and the award’s subsequent enforcement to challenges under national arbitration laws and the New York Convention. Although examples of obviously different treatment are unusual in practice, the issue may still arise where only one party has raised privilege.(172) While privileges are often linked with important public policy considerations, an arbitral tribunal generally does not have the mandate to uphold the public policy of any one country.(173) page "90" Therefore, in determining the law applicable to privilege claims, the tribunal must ensure that the parties’ legitimate expectations and reliance interests are met, as well as ensuring the equal treatment of the parties. Practically speaking, this means negotiating a balance between protecting allegedly privileged material and the need to facilitate the production and scrutiny of material evidence.(174) 5.2. Conflict of laws approach and the closest connection test
Assuming that conflict of laws principles developed in the context of international litigation are also relevant in the context of international arbitration,(175) it is useful to consider the way in which various authorities approach privilege issues. The privileges most commonly discussed in international litigation are those related to legal advisers.(176) Courts in the United States have looked to the ‘centre of gravity’ of the relevant communications and often apply the law of the jurisdiction in which the lawyer who is responsible for the communications at issue is qualified.(177) Other authorities have applied the law of the jurisdiction with which the communications at issue have their ‘closest connection’.(178) This has often lead to the application of the law of the place where the communication was made or where the client is located.(179) It is submitted that the ‘centre of gravity’ and ‘closest connection’ tests are in fact the same.(180) They originated in the works of Savigny, who argued that the task of conflict of laws is to determine the ‘seat’ of a legal relationship;(181) in other words, to determine the legal system with which the legal relationship has the closest territorial connection. The closest connection test has gone beyond a purely territorial meaning and can now be said to have a functional meaning as well.(182) The closest connection or centre of gravity test is considered to be a transnational rule of conflict of laws and is applied by most tribunals, either consciously or intuitively.(183) page "91" If a tribunal is to apply the closest connection test in determining the law applicable to privilege claims, it will need to establish an objective connection between a particular law and the privilege claimed. This will require a tribunal to determine the jurisdiction with which the document or communication in question has the closest link and to apply the law of that jurisdiction.(184) There may be several factors for a tribunal to consider in reaching its conclusion on which law is most closely connected with the relevant document or communication. Some of these factors include: the nature of the evidence; the jurisdiction in which the document was created or where the communication took place; the jurisdiction in which the parties reside; the jurisdiction in which the lawyer who created the document is qualified to practice; and whether the parties expected that a particular privilege rule would be applicable to the document or communication.(185) This is by no means an exhaustive list and a tribunal may consider a myriad of other factors, depending on the nature of the case. 5.2[a]. Law of the Place Where the Lawyer is Qualified versus Law of the Place Where the Communication Was Made
Due consideration of these factors may lead a tribunal to apply one of the laws listed at section 4.4[a] above. Where legal privileges are at issue, it is generally better to apply the law of the place where the lawyer is qualified to practice as opposed to the law of the place where the communication was made.(186) This is because the place where the communication was made is often a result of pure chance, particularly in today’s electronic age.(187) For example, if an Australian lawyer and an Indonesian client meet in New Zealand to negotiate a contract, there would be no compelling reason to apply the privilege law of New Zealand to their communications. In terms of predictability and conforming to party expectations, it would be much better for a tribunal to apply Australian privilege law in this scenario. 5.2[b]. Law of the Place Where the Lawyer is Qualified versus Law of the Client’s Domicile
Some tribunals may wish to apply the law of the client’s domicile, as opposed to the law of the lawyer’s place of qualification, to privilege claims. It is submitted that it is in fact better to apply the law of the lawyer’s qualification, where this is page "92" different from the law of the client’s domicile. The reason for this is that the lawyer will be more aware of privilege issues generally and will be considering these issues from the perspective of his/her own legal system.(188) Knowing that the tribunal will apply the law of the lawyer’s place of qualification will allow the lawyer to effectively advise his/her client as to those communications that are likely to be privileged and those that are not. This best achieves the underlying rationale of privileges and therefore represents a better solution to the problem.(189) Nevertheless, this approach is not without its pitfalls. In many cases, and especially in the case of large international law firms, the client’s lawyers may have qualified in various jurisdictions and the client itself may consist of entities which have their domiciles in various states. In order to deal effectively with this increasingly common reality, Born advocates application of the privilege law of the state in which the senior external lawyer involved in the communications is qualified.(190) However, a further issue with this approach is the potential for clients to engage in so-called ‘forum shopping’ as regards their lawyers. Essentially, the problem here is that clients may select lawyers based on their qualification in a jurisdiction which provides more extensive privilege protections: In the same way that US attorneys and English barristers instructed in the same arbitration in a neutral jurisdiction would take rather different approaches to the preparation of a witness for an arbitral hearing, different standards of privilege protection might be available to the client depending upon which legal professional is instructed. (191) It is not likely that the lawyer’s particular qualification details are going to be a significant factor for a client when instructing the lawyer in an international arbitration case. Indeed, clients are highly unlikely to actually engage in such ‘forum shopping’ in practice.(192) Nevertheless, it raises concerns that very different outcomes may be reached depending on which lawyer the client chooses to instruct.(193) Assuming that all of the other relevant factors, such as the client, the documents and the place of advice are consistent, why should the one factor of where the lawyer has qualified mean that a different privilege standard will potentially apply? This gives cause to question how reliable the basis for such an approach to privilege can be. page "93" 5.2[c]. Problems with the Closest Connection Test
The closest connection test is widely applied by tribunals in the resolution of privilege issues in arbitration.(194) It is attractive because it recognizes the parties’ legitimate expectations and reliance interests.(195) However, the problem with applying the law with the ‘closest connection’ to questions of privilege in international arbitration is that there are a vast number of potentially applicable laws to be considered and evaluated.(196) The level of complexity in this regard will obviously depend on how ‘international’ the arbitration is. This, in turn, will depend on the domicile of the parties and their lawyers; the nationality of the arbitrators; how many different laws are applicable in terms of the law of the seat, the law governing the arbitration agreement and the law governing the contract; where enforcement is likely to be sought, and the like. Some of the laws which would potentially be applicable to a privilege claim, based on the closest connection test, have been set out at section 4.4[a] above. This law will often be different from the law applicable to the arbitral procedure or the merits of the dispute.(197) Another significant problem with the closest connection approach in the context of privilege issues is that, unless the number of documents or communications is very limited, it is going to be difficult and very time consuming for a tribunal to determine the law with the closest connection to each document or communication separately.(198) For example, if a party resists production of twenty documents on the basis of privilege, a tribunal would arguably need to determine the law with the closest connection to each document individually and may indeed come to the conclusion that twenty different laws apply. Such a result, even if unlikely, is untenable. A pragmatic, simple and predictable approach, as opposed to one which seeks to examine privilege on a document-by-document or communication-by-communication basis, is preferable. Possibly the most significant challenge in applying the law with the closest connection is that, in identifying the law with the closest connection to the allegedly privileged communication or document, the tribunal is likely to reach the conclusion that different laws apply between the parties. This could lead to a situation in which one privilege law is applied to one party’s communications, and a different law with different privilege standards is applied to the other party’s page "94" communications. This situation was demonstrated in the example set out at section 3.3 above. It can, of course, be argued that treating the parties differently does not necessarily mean treating them unequally.(199) In fact, treating the parties in the same way without due regard for differences in their circumstances may itself be considered unequal treatment. However, in practical terms, tribunals should avoid applying different privilege standards among the parties.(200) Even if this does not lead to inequality per se, it does give rise to the perception of inequality, which can be dangerous to an award when in the hands of an unsatisfied party. Furthermore, the conflict of laws approach described above provides only relative certainty and has evident problems. Petsche has stated that the notion of substantive neutrality is contravened by the application of the domestic law of one of the parties to an international arbitration.(201) Indeed, this inability of traditional conflict of laws methods to ensure substantive neutrality has been said to equate to the arbitrariness of the conflict of laws.(202) One solution to this could be for the tribunal to modify the result reached by application of the closest connection test so as to ensure that the parties are treated equally and fairly.(203) The tribunal could do this in the course of exercising its discretionary powers in the taking and evaluation of evidence. After all, both equality and flexibility are regarded as fundamental principles of arbitral procedure.(204) Such a tailored approach will be considered in more detail at sections 5.3 and 5.4 below. 5.3. ‘Most favoured nation’ approach
Some tribunals have taken a different approach, using the principle of the equality of the parties as the premise for what is sometimes referred to as the ‘most favoured nation’ standard.(205) According to this approach, the tribunal is required to assess the different privilege standards asserted by the parties and to apply the most protective privilege standard to both parties equally, even though the particular standard would ordinarily only be applicable to one party.(206) page "95" The most favoured nation approach has an advantage in that it meets the legitimate expectations and reliance interests of the parties.(207) Legitimate expectations will generally be more applicable to the party with the higher privilege protection expectation. The party with the lower privilege protection cannot be said to have a ‘legitimate expectation’ that it will obtain a higher standard of protection. Thus, it may be more accurate to refer to this party’s ‘reasonable aspirations’, as opposed to legitimate expectations.(208) The most favoured nation approach also ensures that there are no pro-disclosure surprises.(209) If such an approach is adopted by a tribunal, a party can enter an arbitration with the assurance that it will not be required to produce documents which would be privileged under its own law.(210) The rationale behind applying the highest standard is to ‘level the playing field’(211) and to safeguard the essential components of fairness and equality.(212) This is also the idea behind Article 9(2)(g) of the IBA Evidence Rules, which provides that a tribunal may exclude evidence based on considerations of fairness or equality of the parties.(213) The Commentary to the IBA Evidence Rules indicates that this provision is aimed at establishing ‘equality of arms’ in cases where there is, for example, an unfair distribution of privilege standards between the parties.(214) Article 9(2)(g) permits the tribunal to exclude a party’s ‘technically non- privileged documents’ from production if these documents would be privileged under the law applicable to the other party’s documents so as to ‘assure fairness and equality to all sides in the case’.(215) It therefore suggests that tribunals should reconcile diverging privilege rules if their strict application would lead to significant inequality of treatment. While the IBA Evidence Rules are not usually adopted as mandatory by parties to govern the evidential aspects of the proceedings, they are often applied in page "96" arbitrations throughout the world on the basis that they conform to arbitral best practice.(216) The ICDR Guidelines for Arbitrators Concerning Exchanges of Information also expressly adopt the most favoured nation rule.(217) These Guidelines have effect in international cases administered by the ICDR which were commenced after May 2008. Likewise in an international (although not arbitration) context, this approach has been employed in the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters.(218) A party with very low privilege protections may not be happy that a tribunal chooses to apply the most favoured nation standard. It may perceive this standard as providing illegitimate protection from disclosure to documents or communications which are highly relevant to the matters at issue.(219) This can be problematic because a tribunal has a duty to establish all the facts of a case and to allow the parties a fair opportunity to present their case.(220) Alvarez suggests that in order to address this concern, tribunals ought to approach privilege claims with a healthy degree of scepticism.(221) Despite the concerns outlined above, the most favoured nation approach fulfils the tribunal’s duty to treat the parties equally and fairly. There is an emerging consensus in the international arbitration community that tribunals should apply the most protective privilege law applicable to either party’s communications and documents.(222) This is generally to be preferred over the ‘closest connection’ or ‘centre of gravity’ test because it is more successful in avoiding the difficulties regarding potential challenges and objections to enforcement and recognition of the award.(223) By applying the most favoured nation approach, a tribunal can substantially avoid criticism that there was a procedural irregularity; that it treated the parties unfairly; or that it did not provide the parties with an opportunity to present their case. This is because parties are less likely to challenge an award where they have been afforded more protection than expected, as opposed to less than page "97" expected.(224) Furthermore, a challenge where the tribunal has applied a law which affords more privilege protection is arguably much less likely to succeed than a challenge where a tribunal has applied a less protective law to privilege claims.(225) 5.4. ‘Least favoured nation’ approach
A tribunal could also adopt a ‘least favoured nation’ approach. This standard operates in much the same way as the most favoured nation approach and is also based on the principle of the equality of the parties. However, rather than applying the most protective privilege standard to both parties, a tribunal would apply the least protective privilege standard.(226) Simply put, the least favoured nation approach would require a tribunal to assess the different privilege standards asserted by the parties and to apply the least protective standard to both parties equally, even though the particular standard would ordinarily only be applicable to one party. Thus, it encourages the admission of evidence, as opposed to its exclusion.(227) While this approach, like the most favoured nation standard, establishes formal equality between the parties, it is much more problematic than the latter approach. It can be unfair in that it violates the legitimate expectations of one of the parties.(228) Equality between the parties does not necessarily mean that there is fairness. Indeed, there can be ‘equality in unfairness’.(229) In most cases, applying the law with the lower privilege protection will go against the legitimate expectations of at least one party to the arbitration. Practically speaking, the least favoured nation approach is considerably less popular with tribunals than the most favoured nation approach.(230) This is because parties are much more likely to object when they have not been accorded their expected and familiar privilege standard, than they are to object when they have been accorded a privilege standard which affords more protection than was anticipated.(231) In addition, this approach could raise difficult issues for counsel relating to ethics and professional responsibility.(232) For example, where the privilege is regarded as belonging to the lawyer and not to the client, and the page "98" tribunal has ordered disclosure of documents which the lawyer would otherwise be bound to protect, the lawyer may be subject to professional sanctions if he/she does not protect the privilege.(233) For all of these reasons, tribunals should not generally employ a ‘least favoured nation’ approach to privilege claims in international arbitration. 5.5. International best practice standards
As mentioned above, international arbitration often involves parties of different nationalities, advised by lawyers trained in different legal systems, concerning disputes relating to cross-border contracts. To complicate matters further, these disputes are often resolved by tribunals composed of arbitrators from three different jurisdictions. It is not surprising, therefore, that tribunals can be unsure as to which privilege standard to apply. However, ‘the road is often familiar to experienced practitioners. This raises the question of whether the road can be shortened and the process of resolving the difficulty simplified’.(234) At the present time, a lack of any real authority on the law applicable to privilege claims can mean that parties need to ‘reinvent the wheel’ when disputes regarding privilege arise. In effect, this means that each time there is an international arbitration with disputed privilege issues, parties need to argue their position as to the law applicable and arbitrators need to decide which law is to apply. This appears to be relatively uncontroversial, but when there is no real guidance as to determining the law which tribunals ought to apply to privilege claims, it can lead to less than satisfactory results and may give one or both the parties grounds to challenge the award or to resist its enforcement. According to Tevendale and Cartwright-Finch, it is now possible to speak of a consensus regarding effective approaches to privilege in international arbitration.(235) They argue that a growing consensus may be discerned from a close study of international arbitral practice and the considerable scholarly contributions on privilege in international arbitration.(236) Despite the evidence of such consensus being, for the most part, unofficial or anecdotal, they submit that experienced arbitrators and counsel are generally familiar with the common approaches to privilege claims.(237) If this is correct, then this ‘consensus’ ought to be acknowledged somehow. page "99" Likewise, it has been argued that ‘[c]ertain issues, mainly privileges, would benefit from further developments of transnational practice’.(238) However, does this mean that international best practice standards should be developed to cover privilege issues? Some commentators believe that transnational privilege rules should be applied to both parties’ documents and communications. Professor Park has advocated for this approach, calling for professional associations and arbitral institutions to establish privilege rules applicable in international arbitration.(239) The following is his colourfully phrased view of the current state of affairs and the way in which it ought to be ameliorated: litigants are like diners in a fancy restaurant with a menu that we might call ‘procedure light’, which allows the chef to feed them whatever he wants, as long as each gets the same meal. To force the chef to add or subtract a dish, the diners must do so by common accord...By contrast, a better approach would make the litigants like a couple who are served a fixed meal...One might call this a ‘procedure heavy’ or ‘rules rich’ menu. To change the menu the diners would have to indicate jointly what they did not wish to order, or what they wanted to add....The reason for reversing the way dinner is served derives from the fact that once the arbitration begins, litigants almost by definition are more like a bickering old couple than an amorous twosome, and thus may not agree on much.(240) Meyer also advocates the development of autonomous privilege standards in the context of international arbitration. He argues that since we now have standards for document disclosure (in the form of the IBA Evidence Rules), there should also be standards for privilege because ‘the duty to disclose and privilege are two sides of the same coin’.(241) From the perspective of certainty and predictability, it would be useful to have a ‘rules rich’ menu. However, it is difficult to see how it would be implemented in practice. It is likely that each arbitral institution would draft its own privilege rules and that these would not be uniform across the various institutions. It is questionable whether such rules could be workable in practice given the nature of privilege rights and protections, the extent to which national privilege rules vary, and the diverse approaches to privilege which exist even within the common law and civil law systems themselves.(242) Furthermore, lawyers are usually bound to observe the professional ethics codes of the jurisdictions in which they qualified and practice.(243) There is no requirement for lawyers practising internationally to page "100" be members of an independent international bar. Indeed, such a bar does not exist. For this reason alone, it is difficult to see how any international standard would be developed and enforced. Commentators generally do not look favourably on such suggestions, arguing that transnational rules are very difficult to formulate.(244) After all, the rules and procedures which apply in international arbitration are usually drafted to reflect a combination of common law and civil law norms.(245) It would be difficult, if not impossible, to reconcile the vast differences in privilege laws and rules which exist between jurisdictions and legal traditions. Nevertheless, it is submitted that the current position is not acceptable as it is too uncertain and unpredictable. While procedural diversity in international arbitration certainly serves to ‘enliven the game’, arbitrators must nevertheless try to avoid surprising the parties and should not give them the impression that the ‘game’ being played is ‘American football and British rugby at the same time, never knowing whether and when the ball will be thrown forward’.(246) Of course, the alleged need for international best practice standards in this area must be harmonized with the need to maintain the flexibility of the arbitral process. The current lack of prescription is obviously deliberate – as a result, arbitral tribunals possess a broad discretion in deciding which rules of privilege are applicable in a given case. Flexibility is not the main reason why parties choose to arbitrate their disputes, but it is undoubtedly a material consideration.(247) And yet, it may be said that: [t]he dark side of all this discretion lies in the discomfort that a litigant may feel when arbitrators make up the rules as they go along, divorced from any precise procedural canons set in advance.(248) A situation in which arbitrators are seen to be making up the rules ‘as they go along’ is undesirable to say the least and does not enhance the perceived legitimacy of the arbitral process. Therefore, the best approach would be to strike a compromise between these two positions. Strict rules to determine the law applicable to privilege claims are not desirable, but neither is the current laissez-faire approach with its accompanying uncertainty. A compromise solution could be to develop guidelines on the law applicable to privilege, much like the IBA Evidence Rules. Such page "101" guidelines would be non-binding and would therefore preserve arbitrators’ discretion, party autonomy and the flexibility of the arbitral process in general. At the same time, they would serve as a useful point of reference for parties and tribunals alike. The current international arbitral practice relating to privilege issues is far more advanced and developed than institutional rules or domestic law pertaining to international arbitration indicate. It would be useful and highly desirable to collect and consolidate this practice into guidelines which could serve as a point of reference for parties and arbitrators. Prior to the amendment of the 1999 IBA Evidence Rules, Tevendale and Cartwright-Finch recommended amending the Rules to insert a provision which would guide tribunals in their determinations as to the law applicable to privilege claims.(249) Their proposal, if adopted, would have allowed tribunals to apply the following principles in determining privilege standards applicable in a given case: (a) a ‘closest connection’ approach; (b) a ‘most favoured nation’ approach; or (c) any other principle that the arbitral tribunal considers to be appropriate.(250) Such a formulation is not prescriptive and does not limit the tribunal’s discretion. It does, however, promote certainty in a very important and often raised area in international arbitration. It has the benefit of allowing a tribunal to take into account the individual circumstances of a case when making its determination. Such flexibility may be a key factor in ensuring the equality of the parties. Furthermore, the existence of such guidance would mean that parties could adjust their expectations accordingly. They would be aware, before an arbitration had even begun, that such approaches are available and likely to be used by tribunals in determining the law applicable to any potential privilege claims. This would make it considerably easier to meet the parties’ legitimate expectations if and when privilege issues arise. While this proposal was obviously not adopted, it, or something similar to it, ought to be promulgated. The IBA Evidence Rules would be a convenient vehicle for privilege guidelines. Equally, privilege issues arising in international arbitration are varied and extensive enough to have their own guidelines, which could then address the issues in more detail than the simple formulation suggested by Tevendale and Cartwright-Finch above. Whichever method is chosen, it would be useful for parties and tribunals to have guidance on the complex privilege issues which arise during arbitral proceedings. As stated by Alvarez, ‘[g]eneral, flexible page "102" guidelines combined with arbitral discretion are likely to be sufficient to handle most privilege issues satisfactorily’.(251) In any case, this article advocates the formulation of guidelines, as opposed to binding rules on the subject. Such guidelines would maintain the flexibility of the arbitral process, while helping to preserve its legitimacy by providing greater certainty and predictability. Regardless of the form that these proposed guidelines take – whether included in the IBA Evidence Rules or formulated in a stand- alone document – they should be developed. It is almost inevitable that any guidelines developed will not effectively address all of the difficult privilege issues which may arise in international arbitration. Complex and unique cases will undoubtedly continue to arise. However, general guidelines combined with arbitral discretion, taking into account the principle of equal and fair treatment of the parties, will help to resolve such issues in a flexible manner. 5.6. When should tribunals decide on the law applicable to privilege claims?
Irrespective of which of the approaches set out above a tribunal takes to determine the applicable law, it is submitted that it should decide which law will apply to any potential privilege claims at the outset of the arbitration. Ideally, it should include such a determination in the terms of reference, but certainly before the hearings have commenced. In any case, a tribunal should not wait for a party to assert a privilege claim. If it does wait until a party asserts a privilege claim before determining the applicable law, issues may arise where the other party has already disclosed documents which would also have been privileged under the law that the tribunal applies. This issue was already demonstrated in the example set out at section 3.3 above. By deciding which law will apply to any privilege claims arising during the arbitration at the very beginning of the process, the tribunal will do much to enhance the efficiency of the process and the satisfaction of the parties.(252) Accordingly, it is suggested that the UNCITRAL Notes on Organizing Arbitral Proceedings (‘UNCITRAL Notes’)(253) should be amended to include a recommendation that tribunals determine the law or rules applicable to potential privilege claims at the outset of arbitral proceedings. This could be done by page "103" inserting an additional note under Part 13 of the UNCITRAL Notes, which deals with documentary evidence. Of course, this may not necessarily assist because the documents will already have been created. Nevertheless, an understanding of the applicable rules from the outset will often be helpful to the tribunal, the parties and their counsel.(254) 6. CONCLUSION
Privilege issues in international arbitration have begun to attract more and more attention in recent times. The accompanying legal and practical issues are varied, complex and often disputed due to several factors, namely, the nature, scope and effect of privileges vary as between common law and civil law systems; the fundamental differences in the characterisation of privilege as a matter of substance or procedure in common law and civil law systems; and the absence of any concrete conflict of laws rules to determine the law applicable to privilege claims. In practical terms, the level of difficulty in determining the law applicable to privilege claims will depend on the multi-jurisdictional profile of the parties, their counsel, the arbitrators and the circumstances of the particular dispute. This article has explored the issues involved in determining the law applicable to privilege claims in international arbitration and some of the approaches which are used by tribunals. In short, there is no definitive answer. While it may be said that the ‘most favoured nation’ approach is objectively the best one for tribunals to adopt, even this will depend on the circumstances of the particular case. Among technical arguments for and against certain approaches, a tribunal must always keep in mind considerations of equality and fairness when determining the law applicable to privilege claims. A tribunal’s failure to treat the parties equally and fairly in this regard is likely to be perceived as arbitrary by at least one of the parties and may result in disruption and loss of confidence in the process.(255) More critically, it may lead to a challenge of the award or an objection to its recognition and enforcement. The task, therefore, is to find the appropriate balance between predictability and flexibility. At present, it is unrealistic to expect the promulgation of harmonised rules on privilege. This is in large part due to the disparate regimes of privilege which exist between, but also within, different legal traditions. Furthermore, harmonised mandatory privilege rules are not desirable as they would inhibit the flexibility of the arbitral process. General guidelines, rather than concrete rules, as to the law applicable to privilege claims, would increase each party’s sense that the tribunal page "104" made such determinations in a principled way. Such guidelines should be developed as they would serve to promote the legitimacy of the arbitral process, while preserving its flexibility. page "105" page "106"
* Associate, Sidley Austin LLP (Geneva). The views expressed in this article are those of the author and should not be attributed to Sidley Austin LLP. This article is based on a paper submitted during the MIDS Program (2013–2014). The author would like to thank Prof. Kaufmann-Kohler for her supervision of the work. 1 Javier H. Rubinstein & Britton B. Guerrina, The Attorney-Client Privilege in International Arbitration, 18 Journal of International Arbitration 587 (2001). 2 Ibid. 3 Michelle Sindler & Tina Wüstemann, Privilege Across Borders in Arbitration: Multi-Jurisdictional Nightmare or Storm in a Teacup? 23(4) ASA Bulletin 610, 613 (2005). 4 Gabrielle Kaufmann-Kohler & Philippe Bärtsch, Discovery in International Arbitration: How Much is Too Much? 1 Schieds VZ 13, 14 (2004). 5 See generally, Javier H Rubinstein, International Commercial Arbitration: Reflections at the Crossroads of the Common Law and Civil Law Traditions, 5 Chicago Journal of International Law 303 (2004-2005). 6 Kaufmann-Kohler & Bärtsch, supra n. 4, at 19. 7 Henri C. Alvarez, Evidentiary Privileges in International Arbitration, in International Arbitration 2006: Back to Basics? 664 (Albert Jan van den Berg ed., ICCA Congress Series No. 13, Montreal 2007). 8 International Bar Association, IBA Rules on the Taking of Evidence in International Arbitration (London, 2010). 9 While there are differences between the common law concept of professional privilege and the civil law concept of professional secrecy, this article uses the term ‘privilege’. This reflects current international arbitration practice. 10 Richard M. Mosk & Tom Ginsburg, Evidentiary Privileges in International Arbitration, 50 International and Comparative Law Quarterly 345, 346 (2001). 11 Ibid. at 346 and 385. 12 Ibid. at 346. 13 See, e.g., Loukas A. Miselis, Confidentiality and Third Party Participation, 21 Arbitration International 216 (2005); Prudential Assurance Co. v. Fountain Page Ltd., [1991] 1 W.L.R. 756, 765, where it was stated that legal privilege gives a permissive right, while a duty of confidentiality refers to a legal obligation. 14 James McComish, Foreign Legal Professional Privilege: A New Problem for Australian Private International Law, 28 Sydney Law Review 297, 299 (2006). 15 Mosk & Ginsburg, supra n. 10, at 349–367. 16 The term ‘attorney-client privilege’ is used predominantly in the United States. The notion of attorney-client privilege is encompassed by the term ‘professional secrecy’ in civil law jurisdictions. 17 Canadian terminology. 18 UK terminology. 19 Australian terminology. 20 For an analysis of these two categories of legal professional privilege under English law, see the House of Lords’ discussion in Three Rivers District Council v. Governor and Company of the Bank of England, [2005] 1 A.C. 610, 645. 21 A global survey conducted by Lex Mundi shows that more than ninety jurisdictions contain some form of attorney-client privilege: In- House Counsel and the Attorney-Client Privilege (2004, updated in 2009), available at www.lexmundi.com. (accessed 20 Jun. 2013) See also, Ho Hock Lai, History and Judicial Theories of Legal Professional Privilege. Singapore Journal of Legal Studies 558 (1995). 22 Sindler & Wüstemann, supra n. 3, at 614. See also, Craig Tevendale & Ula Cartwright-Finch, Privilege in International Arbitration: Is It Time to Recognize the Consensus? 26(6) Journal of International Arbitration 823, 824 (2009); and Alvarez, supra n. 7, at 671. 23 Tevendale & Cartwright-Finch, supra n. 22, at 824. 24 Ibid. 25 See, e.g., Law Society of NSW, Revised Professional Conduct and Practice Rules 1995 (NSW)Rule 2; American Bar Association, Model Rules of Professional Conduct, Rule 1(6); UK Solicitors Regulation Authority, Code of Conduct 2011, Ch. 4; CCBE, Charter of Core Principles of the European Legal Profession and Code of Conduct for European Lawyers 2010, Art. 2.3. 26 Gary B. Born, International Commercial Arbitration 1910 (Kluwer Law International, Alphen aan den Rijn 2009). See also, Mosk & Ginsburg, supra n. 10, at 346. 27 Tevendale & Cartwright-Finch, supra n. 22, at 825. 28 Rubinstein, supra n. 5, at 307. 29 Mosk & Ginsburg, supra n. 10, at 352. 30 Pierre Heitzmann, Confidentiality and Privileges in Cross-Border Legal Practice: The Need for a Global Standard? 26(2) ASA Bulletin 205, 208 (2008). 31 Thomas E. Spahn, The Attorney-Client Privilege and the Work Product Doctrine: A Practitioner’s Guide para. 1.501 (Virginia Law Foundation 2007). 32 Fabian von Schlabrendorff & Audley Sheppard, Conflict of Legal Privileges in International Arbitration: An Attempt to Find a Holistic Solution, in Global Reflections in International Law, Commerce and Dispute Resolution: Liber Amicorum in Honour of Robert Briner 743, 746 (Gerald Aksen and others eds., ICC Publishing SA 2005). 33 Evidence Act 1995 (Cth), ss 118 and 119 provide that confidential communications created for the dominant purpose of providing legal advice or litigation are protected from disclosure before federal courts. The same provisions have been adopted in New South Wales and Tasmania. 34 This is based on Wheeler v. Le Marchant, (1881) 17 Ch. 675. See Sindler & Wüstemann, supra n. 3, at 630. 35 Sindler & Wüstemann, supra n. 3, at 630. 36 Pratt Holdings Pty. Ltd. v. Commissioner of Taxation, [2004] F.C.A.F.C. 122. 37 Ibid. 38 Evidence Act 1995 (NSW), ss 118 and 119; Australian Securities & Investments Commission v. Southcorp Ltd., [2003] F.C.A. 804; Gillies v. Downer EDI Ltd, [2010] N.S.W.S.C. 1323; New Cap Reinsurance Corp. Ltd. (in Liq.) v. Renaissance Reinsurance, [2007] N.S.W.S.C. 258; Cadbury Schweppes Pty. Ltd. v. Darrell Lea Chocolate Shops Pty. Ltd. (No 7), [2008] F.C.A. 323. 39 See Jackson v. Marley Davenport Ltd., [2004] EWCA Civ 1225; and Civil Procedure Rules (UK), Rules 35.3 and 35.13. 40 Upjohn Co. v. United States, 449 U.S. 383, 392 (1981); Ritz Hotel Ltd. v. Charles of the Ritz Ltd., (1987) 14 N.S.W.L.R. 100; Ronald D Manes & Michael P Silver, Solicitor-Client Privilege in Canadian Law 53–55 (Butterworths 1993). 41 See Lex Mundi, In-House Counsel and the Attorney-Client Privilege (2004, updated in 2009) available at www.lexmundi.com. (accessed 20 Jun. 2013). 42 Independence in this context means that the in-house counsel must be subject to the same professional and ethical conduct standards as other lawyers in private practice. 43 [2013] Q.S.C. 32. 44 98 F.R.D. 442 (1982). 45 See, e.g., Louis Vuitton Malletier v. Dooner & Bourke, No. 04 Civ. 5316 (2006) W.L. 3476735. 46 Alvarez, supra n. 7, at 668. 47 Rubinstein & Guerrina, supra n. 1, at 591–599. See, e.g., the French Code Pénal, Art. 226-13, which provides that it is an offence to reveal another person’s secret, where that secret was obtained as a result of a professional relationship or as a result of a temporary function or mission. 48 The Bar of Brussels, Professional Secrecy of Lawyers in Europe 15 (Cambridge University Press 2013). 49 Doak Bishop & Thomas Childs, The Requirement of Fair and Equal Treatment with Respect to Document Production in International Arbitration, International Bar Association’s 12th International Arbitration Day Conference (Dubai, February 2009). Note: this feature of Swiss law has been criticized heavily: see Sindler & Wüstemann, supra n. 3, at 616. 50 [1982] E.C.R. 1575. 51 Note: Although this is true for the EU, privilege law is articulated differently in its different Member States, particularly as between the United Kingdom and the other Member States. 52 Sindler & Wüstemann, supra n. 3, at 626. 53 Ibid. 54 Ibid. at 626, supra n. 50. 55 Hilti A.G. v. Commission, [1990] Rs T-30/89. 56 Ibid. 57 Sindler & Wüstemann, supra n. 3, at 626. In AM & S the documents allegedly covered by legal professional privilege concerned Australian law and many of them were signed by in- house lawyers or executives. 58 Joined Cases T-125 and 253/03, [2007] E.C.R. II-3523. 59 Case C-550/07 P, Judgment of the European Court of Justice (Grand Chamber), 14 Sep. 2010. 60 Akzo Nobel Chemicals Ltd. & Akros Chemicals Ltd. v. European Commission, Joined Cases T-125 and 253/03, [2007] E.C.R. II-3523, para. 174. 61 Ibid. para. 170. 62 Giacomo di Federico, Case Law: Akzo Nobel Chemicals Ltd. & Akcros Chemicals Ltd. v. European Commission, Case C-550/07 P, Judgment of the European Court of Justice (Grand Chamber), 14 Sep. 2010, (2011) 48 Common Market Law Review 581, 586. 63 Hans Smit, Roles of the Arbitral Tribunal in Civil Law and Common Law Systems with Respect to Presentation of Evidence, in Planning Efficient Arbitration Proceedings: The Law Applicable in International Arbitration 160 (Albert Jan van den Berg ed., ICCA Congress Series Volume 7 1996). 64 Bishop & Childs, supra n. 49. See also di Federico, supra n. 62, at 597, which sets out the various restrictions on bar admission for in-house counsel in several EU jurisdictions. 65 Alvarez, supra n. 7, at 691. 66 Ibid. 67 See Sindler & Wüstemann, supra n. 3, at 610–611. 68 Rubinstein & Guerrina, supra n. 1, at 589. 69 Federal Rules of Evidence (as amended in 2011), Rule 501 preserves existing common law privileges and allows the development of new privileges in accordance with common law principles. Rule 501 provides: ‘The common law – as interpreted by United States courts in the light of reason and experience – governs a claim of privilege unless any of the following provides otherwise: the United States Constitution; a federal statute; or rules prescribed by the Supreme Court. But in a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.’ 70 Alvarez, supra n. 7, at 673. 71 Ibid. at 672. 72 Gary B. Born, International Arbitration: Law and Practice 186 (Kluwer Law International, Alphen aan den Rijn 2012). 73 von Schlabrendorff & Sheppard, supra n. 32, at 763. 74 Born, supra n. 26, at 1909. 75 See Sindler & Wüstemann, supra n. 3. There are many recent cases, particularly from common law jurisdictions. For example: Three Rivers District Council v. Bank of England (No. 5), [2003] EWCA Civ 474; Three Rivers District Council v. Bank of England (No. 10) [2004] EWCA Civ 218; United States v. Phillip Morris Inc. et al. & British Tobacco, [2004] EWCA Civ 330; Vance v. McCormick, [2004] A.C.T.W.C. 78; Pratt Holdings Pty. Ltd. v. Commissioner of Taxation, [2004] F.C.A.F.C. 122; Kennedy v. Wallace, [2004] F.C.A.F.C. 337; AM & S Europe Ltd. v. European Commission, [1982] E.C.R. 1575; Akzo Nobel Chemicals Ltd. & Akcros Chemicals Ltd. v. European Commission, [2003] E.C.R. II- 4771; Akzo Nobel Chemicals Ltd. & Akcros Chemicals Ltd. v. European Commission, [2007] E.C.R. II-3523. 76 Tevendale and Cartwright-Finch, supra n. 22, at 825. 77 Klaus Peter Berger, Evidentiary Privileges: Best Practice Standards versus/and Arbitral Discretion, 22 Arbitration International 501, 506 (2006); Born, supra n. 72, at 186. 78 UNCITRAL Model Law, Art. 19(2). 79 Gary B. Born, International Arbitration: Law and Practice 186 (Kluwer Law International, Alphen aan den Rijn 2012). 80 Arbitration Act 1996 (UK), s. 34(2)(f). 81 Tevendale & Cartwright-Finch, supra n. 22, at 826. 82 Ibid. 83 Arbitration Act 1996 (UK), s. 34(2)(d). 84 Berger, supra n. 77, at 506. 85 Born, supra n. 72, at 186. 86 International Chamber of Commerce Arbitration Rules (in force as of January 2012), Art. 19. 87 Ibid. Art. 22(4). 88 Ibid. Art. 22(3). 89 Tevendale & Cartwright-Finch, supra n. 22, at 826. 90 LCIA Arbitration Rules (in force as of 1 Jan. 1998), art. 14.1(i). 91 Ibid. Art. 22.1(f). 92 The ICDR is the international arm of the American Arbitration Association. 93 Rules of the AAA International Centre for Dispute Resolution, available at www.adr.org, (accessed on 15 Jun. 2013). 94 International Bar Association, IBA Rules on the Taking of Evidence in International Arbitration (London, 2010). 95 Tevendale & Cartwright-Finch, supra n. 22, at 827. 96 Ibid. at 826. 97 Berger, supra n. 77, at 507. 98 Born, supra n. 72, at 186. Some examples of relevant cases include: Final Award in ICC Case No. 7626, XXII Yearbook of Commercial Arbitration 132 (1997); Dr Horst Reineccius v. Bank for International Settlements, Procedural Order No. 5, Permanent Court of Arbitration (3 May 2002), reprinted in Partial Award (22 Nov. 2002) para. 36, available at www.kluwerarbitration.com, (accessed on 20 May 2013); Glamis Gold Ltd. v. United States, in NAFTA Decision on Parties’ Requests for Production of Documents Withheld on Grounds of Privilege (17 Nov. 2005), available at www.state.gov/s/c/c3741.htm (accessed on 20 May 2013); Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania, Procedural Order No. 2, ICSID Case No. ARB/05/22 (23 May 2006); Pope & Talbot Inc. v. Government of Canada, in NAFTA Decision on Privileges (6 Sep. 2000) para. 1.4, available at www.naftaclaims.com/disputes.htm, (accessed on 20 May 2013). 99 Born, supra n. 72, at 186. 100 Born, supra n. 26, at 1911. Some examples of relevant cases include: Robbins v. Day, 954 F.2d 679 (11th Cir. 1992); Western Employers Insurance Co. v. Merit Insurance Co., 492 F.Supp. 53 (ND Ill, 1979); Great Scott Supermarkets Inc. v. Local Union No. 337, 363 F.Supp. 1351 (ED Mich., 1973); International Association of Machinists & Aerospace Workers v. Pratt & Whitney Div., 329 F.Supp. 283 (D. Conn., 1971); Minerals & Chemical Philipp Corp. v. Panamerican Commodities S.A., 224 N.Y. S 2d 763 (N.Y. App. Div., 1962); Di Maina v. N.Y. State Department of Mental Hygiene, 386 N.Y.S. 2d 590 (N.Y. S. Ct., 1976); Langemyr v. Campbell, 279 N.Y.S. 2d 41 (N.Y. App. Div., 1967). 101 Sindler & Wüstemann, supra n. 3, at 617. See also Born, supra n. 26, at 1912. The argument that an agreement to arbitrate constitutes a waiver of privilege is based on the theory that agreeing to the informality of arbitral procedures also disposes of legal privileges. 102 See at s. 4.3 below for a discussion of privilege as an issue of substance or procedure. 103 Gary B. Born, International Commercial Arbitration 1912 (Kluwer Law International, Alphen aan den Rijn 2009); von Schlabrendorff & Sheppard, supra n. 32, at 763. 104 Heitzmann, supra n. 30, at 218. 105 Charles N. Brower & Jeremy K. Sharpe, Determining the Extent of Discovery and Dealing with Requests for Discovery: Perspectives from the Common Law, in The Leading Arbitrators’ Guide to International Arbitration 307, 331 (Lawrence W. Newman & Richard D. Hill eds., JurisNet LLC 2004), quoting Judge Brower. For example, in Fahnenstock & Waltman, 935 F.2d 512 (C.A. 2, N.Y. 1991), it was held that an arbitral tribunal’s disregard of a justified privilege objection can lead to the setting aside of the award. 106 Mosk & Ginsburg, supra n. 10, at 376. 107 Born, supra n. 26, at 1912. 108 Franco Ferrari & Stefan Kröll (eds), Conflict of Laws in International Arbitration 250 (Sellier European Law Publishers 2011). 109 Veijo Heiskanen, And/Or: The Problem of Qualification in International Arbitration, 26(4) Arbitration International 441, 456 (2010). 110 Mosk & Ginsburg, supra n. 10, at 368. 111 Ibid. at 345. 112 Ibid. at 345. 113 Berger, supra n. 77, at 507. 114 In Baker v. Campbell, (1983) 153 C.L.R. 52, Wilson, J. stated at 94 that the privilege is not limited to a rule of evidence confined to judicial and quasi-judicial proceedings. This statement was followed in Esso Australia Resources Ltd. v. Commissioner of Taxation, (1999) 201 C.L.R. 49 per Gleeson, C.J. at 35 and in Daniels International Corp. Pty. Ltd. v. Australian Competition & Consumer Commission, (2002) 213 C.L.R. 543. 115 Descoteaux v. Mierzwinski, (1982) 141 D.L.R. (3d) 590 per Lamer, J. at 604–5. 116 Commissioner of Inland Review v. West-Walker, [1954] N.Z.L.R. 191, 216. 117 R. (Morgan Grenfell & Co. Ltd.) v. Special Commissioner of Income Tax, [2003] 1 A.C. 563, para. 7. However, more recently Lord Scott of Foscote of the English House of Lords in Three Rivers District Council et al. v. Governor and Company of the Bank of England, [2005] 1 A.C. 610, para. 26 stated that the debate as to whether privilege is a procedural or substantive right is sterile: ‘Legal advice privilege is both. It may be used in legal proceedings to justify the refusal to answer certain questions or to produce for inspection certain documents. Its characterisation as procedural or substantive neither adds to nor detracts from its features.’ 118 Erie R. R. v. Tompkins, 304 U.S. 64 (1938). This case establishes that in cases between parties of different states, federal courts should apply substantive state law. 119 Berger, supra n. 77, at 508. 120 See, e.g., German Code of Civil Procedure, s. 383; German Penal Code, Art. 300; Swiss Penal Code, Art. 321; Belgian Code Judiciaire, Art. 929; Netherlands Code of Criminal Procedure, Art. 191(4); Italian Penal Code, Art. 622; Decree No. 32, 171 (29 Jul. 1942) (Portugal), Art. 7; Civil Procedure Code of Brazil, Art. 406; Japanese Code of Civil Procedure, Arts 280–81. 121 See Pierre Lalive, Les règles de conflit de lois appliqués au fond du litige par l’arbitre international siégeant en Suisse, Revue d’Arbitrage 155, 159 (1976); Mathieu Boisséson, L’arbitre international et le problème de la qualification, in Liber Amicorum Claude Reymond: Autour de l’Arbitrage 30 (Claude Reymond & Jean-Denis Bredin eds., LexisNexis Litec 2004); Gabrielle Kaufmann-Kohler, Globalization of Arbitral Procedure, 36 Vanderbilt Journal of Transnational Law 1313, 1315 (2003); Heiskanen, supra n. 109, at 449. 122 Klaus Peter Berger, International Economic Arbitration 504 (Kluwer Law and Taxation Publishers 1993). 123 Ibid. at 502. 124 See, e.g., Born, supra n. 26, at 1912, infra n. 176; Berger, supra n. 77, at 509; Mosk & Ginsburg, supra n. 10, at 368. 125 [1996] A.C. 487, 507. 126 [1983] Q.B. 878, 913. 127 Berger, supra n. 77, at 509. 128 Ibid. 129 Ibid. See also Three Rivers District Council et al. v. Governor and Company of the Bank of England, [2005] 1 A.C. 610, 635. 130 Berger, supra n. 77, at 508. 131 See, e.g., UNCITRAL Model Law, Art. 1(2); German Arbitration Act, s. 1025(1); Arbitration Act 1996 (UK), s. 2(1); Private International Law Act (Switzerland), Art. 176(1); French Code of Civil Procedure, Bk IV (2011), Art. 1505(1). 132 Berger, supra n. 77, at 508. 133 Ibid. at 509. The legitimate expectations of the parties in the context of privilege claims will be discussed in further detail at s. 5.1 below. 134 Klaus Peter Berger, Re-Examining the Arbitration Agreement, Applicable Law Consensus or Confusion? in International Arbitration 2006: Back to Basics? 316 (Albert Jan van den Berg ed., ICCA Congress Series No. 13, 2007). See also Heitzmann, supra n. 30, at 219–20. 135 This is where the seat of the arbitration is considered the ‘juridical seat’: see Lesotho Highlands Development Authority v. Impregilo SpA et al., [2005] W.L.R. 129, 139. 136 Heitzmann, supra n. 30, at 220. 137 The principle of equality of the parties in the context of privilege claims will be discussed in further detail at s. 5.1 below. 138 Berger, supra n. 77, at 508. 139 Mosk & Ginsburg, supra n. 10, at 377. 140 Born, supra n. 72, at 186. 141 See the discussion of some of these differences at ss 3.1 and 3.2 above. 142 Andrew Barraclough & Jeff Waincymer, Mandatory Rules of Law in International Commercial Arbitration, 6 Melbourne J. International Law 205, 216 (2005). 143 Berger, supra n. 77, at 509. 144 Tevendale & Cartwright-Finch, supra n. 22, at 830. 145 Ibid. 146 von Schlabrendorff & Sheppard, supra n. 32, at 770. 147 Sindler & Wüstemann, supra n. 3, at 618. 148 Olaf Meyer, Time to Take a Closer Look: Privilege in International Arbitration, 24(4) Journal of International Arbitration 365, 368 (2007). 149 Sindler & Wüstemann, supra n. 3, at 619–20. 150 Tevendale & Cartwright-Finch, supra n. 22, at 830. 151 von Schlabrendorff & Sheppard, supra n. 32, at 773. 152 Tevendale & Cartwright-Finch, supra n. 22, at 828. 153 Ibid. See also, Christopher F. Dugan, Foreign Privileges in US Litigation, 5 Journal of International Law and Practice 33 (1996). 154 George Burn & Zara Skelton, The Problem with Legal Privilege in International Arbitration, 72(2) Arbitration Journal of the Chartered Institute of Arbitrators 124–129 (2006). 155 Pierre Lalive, Transnational (or Truly International) Public Policy in Arbitration, in Comparative Arbitration Practice and Public Policy in Arbitration 305–6 (Pieter Sanders ed., Kluwer Law International 1987). 156 Sindler& Wüstemann, supra n. 3, at 620. 157 Ibid. 158 Ibid. 159 Ibid. 160 Tevendale & Cartwright-Finch, supra n. 22, at 829. 161 Mosk & Ginsburg, supra n. 10, at 382. 162 Tevendale & Cartwright-Finch, supra n. 22, at 829. 163 See, e.g., ICC Rules, Art. 41; SIAC Rules, Art. 37.2; and LCIA Rules, Art. 32.2. 164 Note: to a large extent, a tribunal’s choice of law decisions are immune from court scrutiny due to the prohibition of judicial review of the merits. 165 See, e.g., Arbitration Act 1996 (UK), s. 68; Private International Law Act (Switzerland), Art. 190(2)(a); UNCITRAL Model Law, Art. 34(2)(a)(iv). 166 See, e.g., Arbitration Act 1996 (UK), ss 33(1)(a) and 68(2)(a); Private International Law Act (Switzerland), Arts 182(3) and 190(2) (d); UNCITRAL Model Law, Arts 18 and 34(2)(a)(ii). 167 William Park, Arbitration’s Protean Nature: The Value of Rules and the Risks of Discretion, 19 Mealey’s International Arbitration Report 1, 5 (2004). 168 Article V of the New York Convention lists grounds which may be invoked by a party in order to deny recognition and enforcement of an arbitral award. The most relevant ground in the context of privilege claims will be Art. V(1)(b): ‘The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case.’ 169 Sindler & Wüstemann, supra n. 3, at 620. 170 See, e.g., Arbitration Act 1996 (UK), ss 33(1)(a) and 68(2)(a); Private International Law Act (Switzerland), Arts 182(3) and 190(2) (d); UNCITRAL Model Law, Arts 18, 34(2)(a)(ii), 36(1)(a)(ii); New York Convention, Art. V(1)(b). 171 Julian D.M. Lew, Loukas A. Mistelis & Stefan M. Kroll, Comparative International Commercial Arbitration 5–69 (Kluwer Law International 2003); and Emmanuel Gaillard & John Savage (eds), Fouchard, Gaillard, Goldman On International Commercial Arbitration 1639 (Kluwer Law International 1999). 172 Tevendale & Cartwright-Finch, supra n. 22, at 829. 173 Alvarez, supra n. 7, at 682. 174 Tevendale & Cartwright-Finch, supra n. 22, at 829. 175 Born, supra n. 72, at 186. 176 Ibid. 177 Gary B. Born & Peter B. Rutledge, International Civil Litigation in United States Courts 1022–23 (5th edn Wolters Kluwer Law & Business 2011). 178 Born, supra n. 72, at 186; Berger, supra n. 77, at 511. 179 Berger, supra n. 77, at 511. 180 Ibid. at 510; Alvarez, supra n. 7, at 684. 181 Matthias Reimann, Savigny’s Triumph? Choice of Law in Contract Cases at the Close of the Twentieth Century, 39 Virginia Journal of International Law 571, 592 (1999). 182 For example, it is reflected in the following provisions: Rome I Regulation (EU), Art. 4; German Arbitration Act, s. 1051(2); and Private International Law Act (Switzerland), Art. 187(1). It is also reflected in the ‘most significant relationship’ test applied by U.S. courts under the American Law Institute’s Second Restatement of Conflict of Laws. 183 Klaus Peter Berger, International Economic Arbitration 503 (Kluwer Law and Taxation Publishers 1993). 184 Tevendale & Cartwright-Finch, supra n. 22, at 831. 185 Ibid.; Sindler & Wüstemann, supra n. 3, at 618–20. 186 Born, supra n. 26, at 1913. 187 Ibid. 188 Ibid. 189 Ibid. Mosk & Ginsburg, supra n. 10, at 382. 190 Born, supra n. 26, at 1913. 191 Tevendale & Cartwright-Finch, supra n. 22, at 831. 192 Ibid. 832. 193 Ibid. 194 Ibid. 831. 195 Ibid. 196 Ibid. 197 Berger, supra n. 77, at 511. 198 Tevendale & Cartwright-Finch, supra n. 22, at 832. 199 Ibid. 200 Nathan D O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide 9.62 (Informa Law 2013). 201 Markus Petsche, The Growing Autonomy of International Commercial Arbitration 47 (Sellier European Law Publishers 2005). 202 Ibid. 203 Berger, supra n. 77, at 516. 204 Norah Gallagher, Legal Privileges in International Arbitration, 6 International Arbitration Law Review 45, 46 (2003). 205 Born, supra n. 72, at 186. 206 Mosk & Ginsburg, supra n. 10, at 384; Berger, supra n. 77, at 518. 207 Rachel Reiser, Applying Privilege in International Arbitration: The Case for a Uniform Rule, 13 Cardozo Journal of Conflict Resolution 653, 674 (2012). 208 Tevendale & Cartwright-Finch, supra n. 22, at 834. 209 Rubinstein & Guerrina, supra n. 1, at 598–99. 210 Ibid. at 599. 211 Tevendale & Cartwright-Finch, supra n. 22, at 834. 212 von Schlabrendorff & Sheppard, supra n. 32, at 771. 213 The IBA Evidence Rules are considered to be a compromise between broader common law views and the more reserved civil law views. Even where the Rules are not directly applicable, they are a source of useful guidance to parties and tribunals: see Kaufmann- Kohler & Brtsch, supra n. 4, at 18. 214 2010 Rules of Evidence Review Subcommittee, Commentary on the Revised Text of the 2010 IBA Rules on the Taking of Evidence in International Arbitration, 5 Dispute Resolution International 1, 26 (2011). See also, John M. Townsend, Clash and Convergence on Ethical Issues in International Arbitration, 36 Inter-American Law Review 1, 7 (2004). Note: while this article pre-dates the update of the IBA Evidence Rules in 2010, Art. 9(2)(g) of the Rules was not amended. 215 2010 Rules of Evidence Review Subcommittee, Commentary on the Revised Text of the 2010 IBA Rules on the Taking of Evidence in International Arbitration, 5 Dispute Resolution International 1, 26 (2011). 216 Tevendale & Cartwright-Finch, supra n. 22, at 827. 217 Article 7 of the Guidelines provides: ‘The tribunal should respect applicable rules of privilege or professional ethics and other legal impediments. 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 both sides, giving preference to the rule that provides the highest level of protection.’ 218 Article 11 of the Convention provides, inter alia, that any person requested to give evidence may refuse to do so on privilege grounds applicable under the law of the state of execution or under the law of the person’s state of origin. Therefore, as between the privilege law of the state where the requested party is based and the privilege law of the forum state, a court will apply the law which provides the most protection to the attorney-client communications. 219 Alvarez, supra n. 7, at 686. 220 Ibid. 221 Ibid. 222 Bishop & Childs, supra n. 49. 223 von Schlabrendorff & Sheppard, supra n. 32, at 771. 224 Tevendale & Cartwright-Finch, supra n. 22, at 834. 225 Ibid. 226 Berger, supra n. 77, at 519. 227 Alvarez, supra n. 7, at 685. 228 Berger, supra n. 77, at 519. 229 Stewart A. Baker & Mark D. Davis, Arbitral Proceedings Under the UNCITRAL Rules: The Experience of the Iran-United States Claims Tribunal, 23 George Washington Journal of International Law and Economics 267, 273 (1989–1990). 230 Tevendale & Cartwright-Finch, supra n. 22, at 834. 231 Ibid. 232 Ibid. 233 Berger, supra n. 77, at 519. 234 Tevendale & Cartwright-Finch, supra n. 22, at 825. 235 Ibid. at 836. 236 Ibid. 237 Ibid. 238 Kaufmann-Kohler & Brtsch, supra n. 4, at 21. 239 William Park, Arbitration of International Business Disputes: Studies in Law and Practice 58–61, 64 (Oxford University Press 2006). 240 Park, supra n. 167, at 7. 241 Meyer, supra n. 148. 242 Sindler & Wüstemann, supra n. 3, at 636. 243 Rubinstein & Guerrina, supra n. 1, at 600. 244 See, e.g., Bishop & Childs, supra n. 49; Berger, supra n. 77, at 514; Sindler & Wüstemann, supra n. 3, at 637; Gary B. Born, International Commercial Arbitration 1912 (Kluwer Law International, Alphen aan den Rijn 2009); Alvarez, supra n. 7, at 686. 245 Rubinstein, supra n. 5. 246 William Park, Arbitration’s Discontent: Of Elephants and Pornography, 17(3) Arbitration International 265 (2001). 247 Tevendale & Cartwright-Finch, supra n. 22, at 827. 248 Park, supra n. 167, at 5. 249 For a similar proposal, see Rubinstein and Guerrina, supra n. 1, at 600–1. 250 Tevendale & Cartwright-Finch, supra n. 22, at 838. 251 Alvarez, supra n. 7, at 695. 252 Ibid. at 693. 253 United Nations Commission on International Trade Law, UNCITRAL Notes on Organizing Arbitral Proceedings (2012, New York), available at www.uncitral.org/pdf/english/texts/arbitration/arb-notes/arb-notes (accessed on 24 Jun. 2013). The Notes set out an annotated checklist of issues that arbitrators and parties may wish to consider as they organize their arbitral proceedings. 254 Alvarez, supra n. 7, at 693. 255 Ibid. at 675.
© 2016 Kluwer Law International BV (All rights reserved). Kluwer Arbitration is made available for personal use only. All content is protected by copyright and other intellectual property laws. No part of this service or the information contained herein may be reproduced or transmitted in any form or by any means, or used for advertising or promotional purposes, general distribution, creating new collective works, or for resale, without prior written permission of the publisher. If you would like to know more about this service, visit www.kluwerarbitration.com or contact our Sales staff at [email protected] or call +31 (0)172 64 1562. Evidence in International Arbitration
by ROBERT PIETROWSKI*
The Parties may present any proof that they judge useful, and the Court is entirely free to take the evidence into account to the extent that it deems it pertinent.1
M. Huber Downloaded from
IN MANY respects Judge Huber's statement, made in 1925 in connection with the amendment of the rules of the Permanent Court of International Justice,2 still holds true today with respect to much of the practice and procedure relating to
evidence in international arbitration. Subject to the principle that arbitrations http://arbitration.oxfordjournals.org/ should be conducted in an orderly and efficient manner that ensures equal treatment of the parties, the parties to an international arbitration are generally free to submit any evidence they wish in order to prove the facts necessary to establish their respective cases. It is within the discretion of the tribunal to evaluate the evidence submitted.
I. THE EVOLUTION OF COMMON PRINCIPLES AND RULES The purpose of evidence in proceedings before international arbitral tribunals, as in proceedings before municipal courts, is to assist the tribunal in determining the by guest on December 8, 2016 truth as to disputed issues of fact. Like municipal courts, international tribunals have rules of procedure that govern the submission of evidence and its evaluation by the tribunal. Such rules, however, are less restrictive than those typically found in municipal law systems. International arbitration may occur between sovereign states (or other international persons), between a sovereign state and a private party or, as is
* Partner, Covington & Burling. 1 PCIJ, Series D, Acts and Documents Concerning the Organization of the Court, (1926), Addendum to No. 2, Revision of the Rules of Court, p. 250. 2 The Permanent Court of International Justice was a product of the arbitral process. Its statute and rules, like those of its successor, the International Court of Justice, were based largely on the work of the Hague Peace Conferences of 1899 and 1907, which created the Permanent Court of Arbitration. As Reisman has observed, All contemporary international judicial institutions, whether named courts, tribunals, panels or commissions are arbitral, in that at least the formal contingency for their authority in specific cases emanates from the joint will of the litigating parties'. W.M. Reisman, Nullity and Revision (1971), p. 66.
ARBITRATION INTERNATIONAL, Vol. 22, No. 3 © LCIA, 2006
373 374 Arbitration International, Volume 22 Number 3 usually the case in international commercial arbitrations, between private parties. The conduct of the arbitration may be governed by international law, by municipal law - that is, the 'national' or 'local' law of the place of the arbitration — or by some combination thereof. Regardless of the nature of the parties and the law applicable to the arbitration, certain principles and rules pertaining to evidence will in principle be applicable to any arbitration. These principles and rules have evolved from the process of international arbitration over the past two centuries. They have been agreed to in numerous bilateral arbitration treaties and compromis and have been codified in various multilateral conventions, model laws and model rules, and in the rules of international organizations and institutions, such that they are now generally applicable to all Downloaded from international arbitrations unless the parties agree otherwise. This is not to say that there is uniformity in the treatment of evidence in international arbitration. Clearly, such is not the case. For example, a tribunal is less likely to order the production of evidence in an arbitration between states than in a commercial arbitration between private parties, due to the respect http://arbitration.oxfordjournals.org/ accorded the dignity of sovereign states.3 And discovery is likely to be more liberal in an arbitration where the parties, counsel and arbitrators are all from common law jurisdictions than in an arbitration where all of the players are from civil law jurisdictions. Nevertheless, there are a number of principles and rules of evidence that are generally applicable to all international arbitrations irrespective of the nature of the parties and the law governing the conduct of the arbitration. Thus, regardless of whether the parties are states or private parties and whether the arbitration is governed by international law or municipal law, the procedure of most international tribunals is characterized by an absence of restrictive rules by guest on December 8, 2016 governing the form, submission and admissibility of evidence. The evaluation of the evidence is entirely within the discretion of the tribunal. The proceedings usually consist of a written phase followed by an oral phase. The tribunal has authority to set time limits and make procedural orders. Each pardy has the burden of proof with respect to the facts necessary to establish its case and is required to produce the evidence upon which it relies for that purpose. In addition, the tribunal in its discretion may order the production of further evidence. Priority is given to documentary evidence, and tribunals generally admit all documents submitted by the parties. Tribunals also generally admit any testimonial evidence offered by the parties. Affidavits and written witness statements are common in international practice. Oral testimony by witnesses is usually directed by counsel under the control of the tribunal, and is subject to cross-examination by opposing counsel as well as questions by the tribunal. Experts may be called at the instance of the tribunal or the parties to express
3 Even in arbitrations between sovereign states, however, the tribunal generally has the power to order the production of evidence, See e.g., Article 69 of the Hague Convention of 1907, which provides 'The Tribunal can, besides, require from the agents of the parties the production of all papers, and can demand all necessary explanations. In case of refusal the Tribunal takes note of it.' Evidence in International Arbitration 375 opinions on technical issues or other matters requiring special expertise. Experts are expected to be independent and objective, but the tribunal is not bound by the expert's opinion. The tribunal or its experts may visit the place where the dispute arose to gather evidence or acquaint the tribunal in a general way with the factual background of the case. Certain types of evidence are privileged. The evidence of interested persons is usually admissible. Evidence obtained during settlement negotiations is not. These procedures and practices represent a combination of features drawn from the common law and the civil law. For example, the freedom from technical, restrictive rules of evidence is derived from the civil law. The common law rules of admissibility concerning competence, relevance and materiality have developed Downloaded from largely in the context of jury trials and thus have no place in international arbitration. The priority given to documentary evidence in international procedure is also derived from the civil law, which has historically been distrustful of oral evidence. In the common law system, facts are generally proved by testimonial evidence and even documentary evidence is usually introduced by http://arbitration.oxfordjournals.org/ oral testimony. Other features of international practice are derived from the common law, such as the practice of allowing witnesses to be examined by counsel and cross-examined by opposing counsel under the direction of the tribunal. In civil law systems, the examination of witnesses is conducted by the tribunal. Also, the use of ex parte affidavits and written witness statements is derived from the common law. Much of this combination of civil law procedures and common law procedures has been codified in such instruments as the UNCITRAL Arbitration Rules, the various arbitration rules of the Permanent Court of Arbitration and the International Bar Association's Rules on the Taking of Evidence in International by guest on December 8, 2016 Commercial Arbitration. Although these principals and rules of evidence are generally applicable to all international arbitrations, the reported case law discussing these principles and rules consists principally of awards in arbitrations between states and arbitrations between states and private parties. This is because international commercial arbitration remains largely a confidential process. Most international commercial arbitration awards are not published or are published in a redacted format. As Pierre Lalive has observed:
The confidential character of arbitrations, together with their multiplicity and variety, constitutes a tremendous obstacle to a true knowledge of the subject. We must be aware of the fact diat our experience is necessarily limited and our data partial.4
Arbitrations between states, on the other hand, as well as arbitrations between states and private parties, are not generally confidential and the awards in such arbitrations are usually published. These awards contain a wealth of jurisprudence
E Lalive, 'Enforcing Awards' in International Chamber of Commerce, 60 Tears of ICC Arbitration: A Look at the Future (19^), p. 323. 376 Arbitration International, Volume 22 Number 3 concerning the procedural law applicable to international arbitration, including the law of evidence, and are often referred to by tribunals in international commercial arbitrations. The use of arbitration to resolve disputes between states can be traced back to ancient Greece, while commercial arbitration between private parties originated in die guilds and trade associations of medieval Europe. The process of arbitration as we know it today, however, is generally considered to have begun with the Jay Treaty of 1794, which provided for the arbitration of certain disputes between Great Britain and the USA. The Jay Treaty provided for the establishment of three mixed commissions and contained provisions concerning the appointment
and replacement of commissioners; the appointment of agents as intermediaries Downloaded from between the parties and the tribunal; the taking of evidence, both documentary and testimonial; the evaluation of evidence; the applicable law; authentication of documents; decisions by majority vote; and the final and binding nature of the commissions' decisions. As Ralston observed in his classic work on the history of
arbitration: http://arbitration.oxfordjournals.org/
The modern era of arbitral or judicial settlement of international disputes, by common accord among all writers upon the subject, dates from the signing on November 19, 1794, of the Jay Treaty between Great Britain and the United States. Prior to this time arbitrations were irregular and spasmodic; from this time forward they assumed a certain regularity and system.5
Following the Jay Treaty, states resorted to international arbitration with increasing frequency. During the nineteenth century, more than 220 arbitrations involving some 70 different states took place. These arbitrations frequently -
although not always — involved formal rules governing procedure, including the by guest on December 8, 2016 submission and evaluation of evidence. Often, the tribunal was expressly directed by treaty or compromis to decide the dispute in accordance with applicable principles and rules of law.6 Over a period of time, there evolved from these arbitrations certain procedural rules and practices which were subsequently codified and augmented in such instruments as the draft arbitral code adopted by the Institut de Droit International in 1875, the Hague Conventions of 1899 and 1907, the Rules of the Permanent Court of International Justice and the International Court of Justice, and the Model Rules on Arbitral Procedure adopted by the International Law Commission in 1958. These instruments were negotiated and drafted by diplomats and lawyers from diverse legal backgrounds who realised that, to be acceptable in cases where the jurisdiction of the tribunal is inherently consensual, the rules of procedure involved could not be those of any single legal system. Consequently, the rules of procedure that were developed by
5 J. Ralston, International Arbitration from Athens to Locarno (1929), p. 191. 6 See e.g., the Alabama Claims case, where Article VI of the Treaty of Washington provided, 'In deciding the matters submitted to the Arbitrators they shall be governed by the following three rules, which are agreed upon by the High Contracting Parties as rules to be taken as applicable to the case, and by such principles of international law not inconsistent therewith as the Arbitrators shall determine to have been applicable to the case': British and Foreign State Papers, vol. 61, p. 39. Evidence in International Arbitration "ill the Hague Peace Conferences and such bodies as the Institut de Droit International and the International Law Commission were a synthesis of rules drawn from the civil law and the common law. Commercial arbitration between private parties also flourished during the nineteenth century, but the process was much less formal and legalistic than that involved in arbitrations between states. The arbitrators in commercial arbitrations were usually merchants or traders rather than lawyers, and their decisions were generally based on trade practices and notions of fairness rather than the rule of law. Such arbitrations were conducted without formal rules of procedure and evidence. Even with the advent of commercial arbitral institutions in the late 7 nineteenth and early twentieth centuries, commercial arbitration remained an Downloaded from informal and largely non-legalistic affair. The early arbitration rules of all of the major commercial arbitral institutions were largely silent as to procedure except with respect to the institution of arbitral proceedings and the constitution of the tribunal.8
It was not until the latter part of the twentieth century that commercial http://arbitration.oxfordjournals.org/ arbitration became the formal, legal process that we know today. This evolution was a natural and inevitable consequence of the fact that arbitration has become the principal means of resolving major international commercial disputes. Such disputes typically involve complex factual and legal issues which could not be effectively resolved without established principles and rules of procedure. As the need for such principles and rules evolved, it was natural for the parties and tribunals involved in commercial arbitrations to look to the various existing codifications of arbitral procedure that had been formulated in the context of arbitrations between states - procedures which reflected a compromise between the civil law and the common law. by guest on December 8, 2016 The evolution of formal procedure in commercial arbitration was not simply a matter of adopting procedures used in arbitrations between states, however. There was a more pragmatic aspect of this evolution: international commercial arbitration, like arbitration between states, typically involves parties, counsel and arbitrators from different legal systems. If the process of commercial arbitration is to work efficiently and effectively, it must accommodate this legal diversity. Even today, the rules of commercial arbitral institutions such as the ICC and the LCIA contain very little in terms of the procedure that is to govern the conduct of the arbitration. In general, these rules permit the parties to agree on the procedure to be followed by the tribunal in conducting the arbitral proceedings. In practice, however, most of the procedures and rules concerning evidence in major commercial arbitrations are the same as those found in arbitrations between states and arbitrations between states and private parties.
The London Court of International Arbitration was established as the London Chamber of Arbitration in 1891; the Arbitration Institute of the Stockholm Chamber of Commerce was established in 1917; the International Chamber of Commerce Court of Arbitration was established in 1923; and the American Arbitration Association was established in 1926. See e.g., the Rules of Procedure for Arbitration of the International Chamber of Commerce approved by the Council of the International Chamber of Commerce at its meeting on 10 July 1922. 378 Arbitration International, Volume 22 Number 3
Thus, many of the provisions in the UNCITRAL Arbitration Rules and the IBA Rules of Evidence have counterparts in the rules of the Permanent Court of Arbitration (including those in the Hague Conventions) and in the ICSID Arbitration Rules. Turning now to the particular principles and rules of evidence that are common to most international arbitrations.
(a) Admissibility of Evidence Because of the use of juries in the common law system, common law procedure is characterised by technical, restrictive rules of evidence which may preclude the Downloaded from admission of documentary or testimonial evidence for lack of sufficient relevance, materiality or credibility. In common law jurisdictions, considerable time and effort are often spent in procedural wrangling concerning the admissibility of particular evidence. Historically, international tribunals have had little patience with such practice and have taken the view that they should hear and consider http://arbitration.oxfordjournals.org/ everything that each party has to say concerning the dispute. The tribunal itself determines the relevance, materiality and probative value of all evidence submitted by the parties, and does not need to hear argument from the parties concerning these matters. It is for the parties to submit the evidence and for the tribunal to evaluate it. Thus, in the South- West Africa cases, in responding to objections by the applicant's agent concerning testimony of the respondent's witness, the President of the International Court of Justice9 stated:
The evidence will remain on the record; die Court is quite able to evaluate evidence, and if there is no value in the evidence, then there will be no value given to this part of the evidence by guest on December 8, 2016 ... This Court is not bound by the strict rules of evidence applicable in municipal courts and if the evidence established by the witness does not sufficiently convey that the evidence is reliable in point of fact, then the Court, of course, deals with it accordingly when it comes to its deliberation.10
Although international tribunals will generally admit any evidence that a party deems necessary to establish its case, a tribunal always has authority to determine that evidence is inadmissible in appropriate circumstances. Evidence may be excluded if it is unduly burdensome, duplicative, defamatory or obviously irrelevant. The authority of an international arbitral tribunal to determine the admissibility and the probative value of any evidence submitted to it has been codified by the International Law Commission in its Model Draft on Arbitral Procedure,11 by the United Nations Commission on International Trade Law (UNCITRAL) in its Model Law on International Commercial Arbitration,12 by
9 As to the relevance of the jurisprudence of the International Court of Justice and its predecessor, the Permanent Court of International Justice, to international arbitration, see supra n. 2. 10 South-West Africa cases, (Second Phase), [1966] ICJ Rep., Pleadings, vol. 10, p. 122; vol. 11, p. 460. 11 Article 21(1). 12 Article 19. Evidence in International Arbitration 379
the International Bar Association in its Rules of Evidence,13 and in the rules of various arbitral institutions such as the International Centre for Settlement of Investment Disputes,14 the International Chamber of Commerce15 and the London Court of International Arbitration.16
(b) Burden of Proof and Standard of Proof As a general rule, a party to an international arbitration has the burden of proving the facts necessary to establish its claim or defence. The standard of proof - i.e., the quantum or degree of proof used to determine whether this burden has been discharged - has not evolved into a general rule, however. As Downloaded from Judge Buergenthal has observed:
What standard of proof to apply in a given case is yet another question that is of importance to international judicial fact-finding. There is nevertheless very little international precedent on the subject.17 http://arbitration.oxfordjournals.org/ International arbitration conventions, national arbitration laws, compromis, arbitration rules and even the decisions of arbitral tribunals are almost uniformly silent on the subject of the standard of proof. This fact is in part a reflection of the general rule that an international tribunal has discretion to determine the probative value of all evidence submitted by the parties. Such discretion is inherendy subjective; the tribunal must decide for itself whether, based on the evidence submitted by the parties, the truth of a particular claim or defence has been established. This discretionary authority by its nature invites an entirely personal assessment of evidence by the tribunal. by guest on December 8, 2016 In assessing the evidence, arbitrators will generally apply standards with which they are familiar as a result of their own particular legal background. Generally speaking, in common law systems courts apply the 'preponderance of the evidence' or 'balance of probability' standard in non-criminal cases, whereas in civil law systems the standard of proof is one of 'I'intime conviction dujuge'. As applied in international arbitration, there appears to be little practical difference between these standards, as shown by the frequency with which arbitrators from different legal systems concur in the fact-finding process. A higher standard of proof may be applied in cases involving particularly sensitive allegations of wrongdoing such as conduct contra bonos mores. For example, the European Court of Human Rights has held that allegations that a state has engaged in practices involving torture or other inhumane treatment of prisoners must be proved 'beyond a reasonable doubt'.18 And the Inter-American Court of
13 Article 9(1). 14 Rule 34(1). 15 Article 20(1). 16 Article 14(3). 17 R. Lillich (ed.), Fact-Finding Before International Tribunals (1992), p. 271. 18 Ireland v. United Kingdom (1978) 25 Eur Ct HR (sen A) 65. 380 Arbitration International, Volume 22 Number 3
Human Rights has held that allegations that a state has carried out or tolerated a practice of disappearances in its territory must be proved 'in a convincing manner'.19 A higher standard of proof may also be applicable in cases involving allegations of bribery, fraud, corruption or extortion. For instance, the Iran- United States Claims Tribunal has held with respect to allegations of bribery that, 'If reasonable doubts remain, such an allegation cannot be deemed to be established'.20 It could be argued that more frequent articulation of the standard of proof by international tribunals would enhance the appearance of fairness in international arbitration. As Lord Hewart observed, 'it ... is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen Downloaded from to be done'.21 On the other hand, the increasing use of international arbitration, coupled with the relative infrequency of challenges of arbitral awards,22 suggests that in fact international arbitration is widely perceived as an inherently fair process, notwithstanding the general practice of international tribunals to refrain from http://arbitration.oxfordjournals.org/ articulating the standard of proof used to decide cases.
(c) Direct and Indirect Evidence With respect to both documentary evidence and testimonial evidence, international tribunals distinguish between 'direct' or 'primary' evidence and 'indirect', 'secondary' or 'circumstantial' evidence. The direct evidence of a document is the document itself.23 A copy of the document or testimony as to the content of the document by a person who has read it is indirect evidence. Direct
testimonial evidence is the testimony of a witness who has personally observed a by guest on December 8, 2016 fact or event. The affidavit of such a witness, as well as testimony of a witness whose knowledge is derived from a third person rather than personal observation (i.e., 'hearsay' testimony), are indirect evidence. In international arbitration, the distinction between direct or primary evidence and indirect or secondary evidence involves the weight of the evidence, not its admissibility. Direct evidence is preferred and will generally be given more weight than indirect evidence. Nevertheless, indirect evidence is generally accepted by international tribunals, and if direct evidence is not available, indirect evidence is the only method of proof. Similarly, if direct evidence is impeached, indirect evidence may be decisive.
19 Velasquez Rodriguez case, Judgment (Merits), Inter-American Court of Human Rights, Series C: Decisions and Judgments, No. 4 (1988), para. 138. 20 Oil Field ofTexas, Inc. v. Government of the Islamic Republic of Iran and others, (1986), 12 Iran-US CTR 315. 21 Rv. Sussex Justices, ex parte McCarthy [1924] 1 KB 259. 22 Most arbitral awards are voluntarily complied with. See A. van den Berg, 'Refusals of Enforcement under the New York Convention of 1958: the Unfortunate Few' in ICC International Court of Arbitration, Arbitration in the Next Decade (1998), p. 75; A. Redfern andM. Hunter, Law and Practice of International Commercial Arbitration (2nd edn, 1991), p. 416; P. Lalive, supra n. 7 at p. 323. 23 In the common law system, the so-called 'best evidence' rule requires that the terms of a document be proved by the production of the document itself. A similar rule obtains in the civil law system. Evidence in International Arbitration 381
In determining the weight to be given indirect evidence, a tribunal will consider whether there is an acceptable reason for the non-production of direct evidence. In cases of nationalisation or civil unrest, for example, documents constituting direct evidence are often lost or destroyed. A party who submits indirect evidence without offering convincing proof that direct evidence is not available risks an adverse award.24 In evaluating indirect evidence, a tribunal will also consider whether corroborating evidence is available.
(d) Presumptions and Inferences In the absence of direct evidence, international tribunals often presume or infer Downloaded from facts on the basis of other proven or accepted facts (such proven or accepted facts constitute indirect evidence). A presumption or inference in favour of one party in effect puts the burden of proof on the other party. As Bin Cheng observed in his classic work on the general principles of law applied by international tribunals, 'it is legitimate for a tribunal to presume the truth of certain facts or of a certain http://arbitration.oxfordjournals.org/ state of affairs, leaving it to the party alleging the contrary to establish its contention'.25 The use of inferences by international tribunals is illustrated by the decision of the International Court of Justice in the Corfu Channel case. There, the United Kingdom alleged that Albania was responsible under international law for damage and loss of life caused by the explosion of mines in Albanian territorial waters. Albania denied any complicity in or knowledge of the laying of the mines, but admitted that such knowledge, if it existed, would involve Albania's responsibility. The United Kingdom could not produce direct evidence of such
knowledge, and the Court refused to presume such knowledge merely on the by guest on December 8, 2016 basis of the fact that the mines were located in Albania's territorial waters. The Court recognised, however, that the fact that the injury complained of occurred in waters subject to the exclusive territorial control of Albania limited the methods of proof available to the United Kingdom. In this connection, the Court said:
the fact of this exclusive territorial control exercised by a State within its frontiers has a bearing upon the methods of proof available to establish the knowledge of that State as to such events. By reason of this exclusive control, the other State, the victim of a breach of international law, is often unable to furnish direct proof of facts giving rise to responsibility. Such a State should be allowed a more liberal recourse to inferences of fact and circumstantial evidence. This indirect evidence is admitted in all systems of law, and its use is recognized by international decisions. It must be regarded as of special weight when it is based on a series of facts linked together and leading logically to a single conclusion. The Court must examine therefore whether it has been established by means of indirect evidence that Albania has knowledge of mine-laying in her territorial waters.26 (Emphasis added).
24 See e.g., HA. Spalding Inc. v. Ministry of Roads and Transport of the Islamic Republic of Iran, (1986), 10 Iran-US CTR 31. 25 B. Cheng, General Principles of Law as Applied by International Courts and Tribunals (1953), p. 304. 26 [1949] ICJRep. 18. 382 Arbitration International, Volume 22 Number 3
On the basis of such indirect evidence, the Court imputed knowledge of the mines to Albania.27 Tribunals often draw inferences from a party's conduct. For example, a party's failure to object may give rise to an inference that the party agrees to or accepts the matter in issue if the circumstances are such as to call for a positive reaction if an objection exists. Thus, in the Temple of Preah Vihear case, the International Court of Justice inferred Siam's acceptance in 1908-1909 of a map prepared by French authorities in connection with the delimitation of the boundary between Siam, as Thailand was then known, and Cambodia, which at the time was part of French Indo-China. The map was prepared pursuant to a treaty entered into by
France and Siam in 1904. The treaty provided that the boundary between Downloaded from Cambodia and Siam in the vicinity of Preah Vihear was the watershed line. It also provided that a mixed Franco-Siamese boundary commission would be established to determine the exact course of the boundary. The mixed commission was established in due course. It surveyed the frontier and fixed the boundary. The final stage in the delimitation process was the preparation and http://arbitration.oxfordjournals.org/ publication of maps. Because the Government of Siam lacked the technical resources to prepare the maps, it requested the French Government to do so. The French authorities proceeded to prepare a series of 11 maps, including the so- called Annex I map' that delimited the boundary in the vicinity of Preah Vihear, which was subsequently disputed by Cambodia and Thailand. The Annex I map showed Preah Vihear as being situated in the territory of Cambodia. The map was not signed by the mixed commission and was not formally incorporated in the boundary treaty. In proceedings before the International Court of Justice, Thailand argued that the Annex I map was in error and at variance with the treaty because the boundary delimited on the Annex I map was not the by guest on December 8, 2016 watershed line. According to Thailand, the true watershed line placed Preah Vihear in Thai territory. The Court, however, never reached the question of whether the Annex I map was in error. It found that the manner in which the map was communicated to the Siamese Government and publicised elsewhere called for a positive reaction from Siam if it did not accept the map as representing the parties' agreement as to the boundary. The particular circumstances which the Court found called for a positive reaction if Siam did not accept the map were the following:
It is clear from the record that the publication and communication of the eleven maps ... including the Annex I map, was something of an occasion. This was no mere interchange between the French and Siamese Governments, though, even if it had been, it could have sufficed in law. On the contrary, the maps were given wide publicity in all technically interested quarters by being also communicated to the leading geographical societies in important countries, and to other circles regionally interested; to the Siamese legations accredited to the British, German, Russian and United States Governments; and to all the members of the Mixed Commission, French and Siamese. The full original distribution consisted of about one hundred
2' ibid. p. 22. Evidence in International Arbitration 383
and sixty sets of eleven maps each. Fifty sets of this distribution were allocated to the Siamese Government.28
In light of these circumstances, the Court concluded:
it is clear that the circumstances were such as called for some reaction, within a reasonable period, on the part of the Siamese authorities, if they wished to disagree with the map or had any serious question to raise in regard to it. They did not do so, either then or for many years, and thereby must be held to have acquiesced. Qui tacet consentire videtur si liquid debuisset ac potuisset.'29
On the basis of Siam's acquiescence, the Court inferred Siam's acceptance of Downloaded from the Annex I map and held that Cambodia had sovereignty over the disputed area. The Court explained its reasoning as follows:
The Court however considers that Thailand in 1908-1909 did accept the Annex I map as
representing the outcome of the work of delimitation, and hence recognized the line on the map http://arbitration.oxfordjournals.org/ as being the frontier line, the effect of which is to situate Preah Vihear in Cambodian territory
The Court considers that the acceptance of the Annex I map by the Parties caused the map to enter the treaty setdement and to become an integral part of it ... The Parties at that time [1908] adopted an interpretation of the treaty settlement which caused the map line, in so far as it may have departed from the line of the watershed, to prevail over the relevant clause of the treaty.30 Inferences from a party's failure to object often arise in a commercial context. Thus, the Iran-United States Claims Tribunal has repeatedly held that a party's failure to object to invoices in a timely manner gives rise to a presumption that by guest on December 8, 2016 the invoices are correct,31 and that a party's failure to object in a timely manner to alleged defects in a contractor's work raises serious doubts as to the existence of such defects.32 A tribunal may also draw an adverse or negative inference from a party's failure to produce evidence known or presumed to be in its possession. International tribunals generally have authority to order the production of evidence, and a party which has been ordered to produce evidence in its possession is under an obligation to do so. The failure of a party to produce evidence in its possession may give rise to an inference that the evidence is adverse to the interests of that party. The nature of the inference will depend on the particular circumstances involved. In the INA case, for example, Iran failed to
28 [1962] ICJ Rep. 22. 29 ibid. p. 23. 30 ibid. pp. 32, 33-34. The Court's decision that Preah Vihear was subject to the sovereignty of Cambodia was also based on the principle of estoppel. The Court said that even if Siam had not accepted the Annex I map in 1908, it would be precluded by its conduct subsequent to 1908 from asserting that it had not accepted the map and the boundary depicted thereon, ibid. p. 32. 31 See e.g., Rockwell International Systems, Inc. v. Government of the Islamic Republic of Iran, (1989), 22 Iran-US CTR 183. 32 See e.g., DIC of Delaware, Inc. v. Tehran Redevelopment Corp. and others, (1985), 8 Iran-US CTR 176. 384 Arbitration International, Volume 22 Number 3 produce documents supporting and explaining its valuation of certain expropriated property. The Iran-United States Claims Tribunal inferred from this failure to produce evidence that Iran's valuation did not reflect the value of the property in question. The Tribunal said:
The report's numerous references to special rules and directives of CII also make it impossible for the Tribunal to judge the validity of the valuation techniques used. The Respondent has furnished neither the texts of such rules and directives nor the underlying documents, although it was ordered to do so. The Respondent's attempt to excuse its non-compliance with the Tribunal's order by merely stating that the documents were 'voluminous' is not convincing ... In assessing the evidentiary weight of the Amin report, the Tribunal must draw negative
inferences from die Respondent's failure to submit die documents which it was ordered to Downloaded from produce. In sum, the Amin report is so qualified and limited, and so influenced by unexplained, specially adopted (and not generally accepted) accounting techniques, that it cannot be considered to reflect the value of Shargh at the time of nationalization.33
The Tribunal's statement that it found Iran's excuse for failing to produce the http://arbitration.oxfordjournals.org/ documents 'not convincing' is important. To draw an inference against a party for failure to produce evidence not reasonably believed to be in the party's possession would expose the award to nullification on such grounds as denial of justice and contravention of the principle of equality of the parties. For this reason, a tribunal will be reluctant to draw a negative inference unless it is convinced that the party which has failed to produce the evidence in question is in fact able to produce the evidence. Inferences and presumptions generally are not conclusive and may be rebutted by relevant evidence. As Sandifer observed, 'Any party relying upon ... a
presumption in place of assuming a primary burden to establish by competent by guest on December 8, 2016 evidence allegations on which he relies does so at his own risk'.34 There may be an issue, however, as to whether the available evidence is sufficient to overcome a presumption. Thus, in the Temple of Preah Vihear case, Judge Spender, disagreeing with the majority, considered the evidence sufficient to overcome any inference or presumption that Thailand had accepted the Annex I map. In his dissenting opinion he said:
In the face of the facts stated - all of which are established beyond controversy - it is an unproductive exercise to have recourse to presumptions or inferences ... No presumptions can be made and no inference can be drawn which are inconsistent with facts incontrovertibly established by the evidence. These facts admit of only one conclusion, namely: that the frontier line on Annex I was not a line agreed upon by the Mixed Commission as a delimitation of the frontier of the Dangrek.35
33 INA Corp. v. Government of the Islamic Republic of Iran, (1985), 8 Iran-US CTR 382. For other cases where the tribunal drew a negative inference from a party's failure to produce evidence, see Sedco, Inc. v. National Iranian Oil Co. and others, (1987), 15 Iran-US CTR 55; Foremost Tehran, Inc. and others v. Government of the Islamic Republic of Iran and others, (1986) 10 Iran-US CTR 302; and Parker v. Mexico, United States and Mexico General Claims Commission, Opinions of Commissioners (1926), pp. 39—40. 34 D. Sandifer, Evidence Before International Tribunals (rev. edn, 1975), p. 146. 35 [1962] ICJRep. 109. Evidence in International Arbitration 385
(e) Judicial Notice An arbitral tribunal is not required to base its decision solely on the evidence produced by the parties. It may take judicial notice of facts that are so well known or so easily verified that any kind of formal proof would obviously be superfluous. Different tribunals have taken notice of such facts as historical events,36 treaties,37 legislative enactments38 and documents in the public domain.39 Also, although international tribunals will generally hear evidence of the applicable law if offered by the parties, they frequently apply the principle of jura novit curia, which amounts to judicial notice of the applicable law. Thus, the International Court of Justice has said, 'as an international judicial organ, [the Downloaded from Court] is deemed to take judicial notice of international law'.40 Similarly, tribunals in commercial arbitrations are deemed to know the applicable municipal law or to be able to ascertain it without evidence submitted by the parties.41 There is no definitive list of the matters of which judicial .notice may be taken by international tribunals. In each case, it is for the particular tribunal to decide http://arbitration.oxfordjournals.org/ in light of the relevant circumstances. As Judge Huber said in the Island of Palmas case, 'It is for the Arbitrator to decide both whether allegations do or - as being within the knowledge of the tribunal — do not need evidence in support and whether the evidence produced is sufficient or not'.42
II. THE PROCEDURAL LAW APPLICABLE TO EVIDENCE (a) Arbitrations between Private Parties Inherent in the principle of territorial sovereignty is the right of every state to regulate conduct within its own territory. As Brierly put it: by guest on December 8, 2016
At the basis of international law lies the notion that a state occupies a definite part of the surface of the earth, within which it normally exercises, subject to the limitations imposed by international law, jurisdiction over persons and things to the exclusion of the jurisdiction of other states. When a state exercises an authority of this kind over a certain territory it is popularly said to have 'sovereignty' over the territory.43
Thus, the conduct of arbitrations between private parties, which compromise most international commercial arbitrations, is in principle always subject to the
36 See e.g., Fabiani case, J.B. Moore, International Arbitrations (1898), vol. 5, p. 4905. 37 See e.g., Island of Palmas case, (1928), United Nations, Reports of International Arbitral Awards, vol. II, p. 842. 38 See e.g., Starrett Housing Corp. and others v. Government of the Islamic Republic of Iran and others, (1987), 16 Iran-US CTR 190. 39 See e.g., Flexi- Van Leasing, Inc. v. Government of the Islamic Republic of Iran, (1982), Order No. 36, 1 Iran-US CTR 455. 40 Fisheries Jurisdiction [1974] ICJ Rep. 9. But the Court treats municipal law as a fact which may require proof. Case concerning Certain German Interests in Polish Upper Silesia, PC1J, Sen A, No. 7, p. 19. 41 See e.g., ICC Case No. 5418, International Council for Commercial Arbitration, XII Yearbook 102 (1988). 42 United Nations, Reports of International Arbitral Awards, vol. II, p. 841. 43 J.L. Brierly, The Law of Nations (6th edn, 1963), p. 162. 386 Arbitration International, Volume 22 Number 3 jurisdiction of the state where the arbitration takes place. If, for example, two private parties agree to arbitrate a commercial dispute in France, the conduct of the arbitration will be subject to any mandatory rules of French law regardless of the law that governs the substantive issues in the case. Occasionally in arbitrations between private parties, the parties agree that the conduct of the arbitration will be governed by some law other than the municipal law of the state in which the arbitration takes place. For example, they may agree that the arbitration will be governed by 'transnational law', 'international law' or 'general principles of law'. Such efforts to remove the arbitration from the reach of the municipal law of the seat of the arbitration are commonly referred to as
'delocalisation' of the arbitration. The extent to which the parties themselves can Downloaded from delocalise the arbitration will depend on the particular municipal law involved. The municipal laws of France and Switzerland, for example, contain few mandatory procedural rules applicable to international arbitration, leaving it to the parties and the tribunal to determine such rules. The laws of Italy and the
United Kingdom, on the other hand, contain more in the way of mandatory http://arbitration.oxfordjournals.org/ rules and are generally more intrusive in the arbitral process. The subject of derealization has attracted a good deal of scholarly debate, particularly with respect to its implications for the enforcement of awards.44 Redfern and Hunter have explained the rationale for the notion of derealization as follows:
The intention underlying the delocalisation theory is a sensible one. It is to grant freedom to international commercial arbitration from the constraints of different national legal systems, and so make the place of arbitration a matter of no legal significance. An arbitral tribunal would not need to be concerned with the law of the place in which the arbitration was being held; all that it would need to do would be to comply with the requirements of international public order by guest on December 8, 2016 (including, in particular, the requirement of a fair hearing) so as to ensure the international acceptability of its award.45
Whatever may be the merits of derealization from the standpoint of judicial philosophy, however, private parties to an international arbitration may expose the award to challenge in the courts at the seat of the arbitration if they disregard mandatory rules of municipal law.46 Municipal law typically contains provisions concerning such procedural matters as the appointment of arbitrators, the challenge of arbitrators, interim measures of protection, the form and validity of the arbitral award, and the grounds and procedures for recourse against an award. Municipal law generally contains few mandatory rules concerning evidence in international arbitrations, however. While some variations occur in municipal law with respect to such
See E Mayer, 'The Trend Towards Delocalisation in the Last 100 Years' in The Internationalisatwn of International Arbitration: The LCIA Centenary Conference (1995), p. 37; P. Lalive, 'Les regies de conflit de lois appliquees au fond du litige par l'arbitre international siegient en Suisse' in Revenue de I'arbitrage (1976), p. 155; P. Fouchard, L'Arbitrage Commercial International (1965), p. 22. A. Redfern and M. Hunter, Law and Practice of International Commercial Arbitration (1991), p. 88. See e.g., English Arbitration Act 1996, s. 68 which provides for the setting aside of awards if certain mandatory rules of English law are contravened. Evidence in International Arbitration 387 matters as the use of oaths and the preparation of witnesses, most municipal legal systems leave evidentiary matters in international arbitrations largely to the discretion of the tribunal and the agreement of the parties.
(b) Arbitrations between States The situation with respect to the applicable procedural law in arbitrations between sovereign states is quite different. The reason, again, is grounded in the notion of sovereignty. As Brownlie has stated, 'The sovereignty and equality of states represent the basic constitutional doctrine of the law of nations, which governs a community consisting primarily of states having a uniform legal Downloaded from personality'.47 A state may agree to limitations of its sovereignty in favour of another state,48 but such limitations will not be presumed.49 If two states agree to arbitrate in the territory of a third state, they do not thereby subject the conduct of the arbitration to the municipal law of the third state; the arbitration will be governed http://arbitration.oxfordjournals.org/ by public international law. In most cases, the parties to the arbitration will agree with the state in whose territory the arbitration takes place to confer immunity upon the arbitral proceedings and the participant.50 Similarly, institutions such as the Permanent Court of Arbitration which conduct arbitrations between sovereign states usually have immunity agreements with the states in which they are located.51 Even without such an agreement, however, the principles of sovereignty and the equality of states would preclude the application of municipal law to the arbitration. Of course, the states that are parties to the arbitration could, as an attribute of
their sovereignty, agree to submit the conduct of the arbitration to municipal law, by guest on December 8, 2016 but to do so would be extraordinary. Mann summed up the practice of states with respect to the procedural law in arbitrations between states as follows:
Though there is no compelling reason of principle or logic why in a given case States should not decide upon arbitration under the law of a particular State, it has so far been the uniform practice to divorce arbitration between States entirely from any system of municipal law, and to submit it to public international law. This seems to be generally accepted or assumed, but is hardly ever stated in express terms. The tribunal cannot help of course, having its seat and its hearings in national territory, and this probably presupposes the consent of such territory's sovereign. But his law does not reach the arbitration between States. Thus the arbitration will follow its own procedural rules, whether they are laid down in the compromis or derived from a multilateral Convention such as the Hague Convention of 1907 or from general international
47 I. Brownlie, Principles of Public International Law (4th edn, 1990), p. 287. 48 See e.g., The S.S. Wimbledon, PCIJ, Sen A, No. 1, p. 25. 49 See e.g., Case concerning the Swedish Motorship Kronprins Gustqf Adolf and Pacific (1932) 26 AJIL 896 (1932). 50 See e.g., Exchange of Notes constituting an Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Swiss Confederation regarding the Status, Privileges and Immunities in Switzerland of the Court of Arbitration in the Beagle Channel Case and Persons Connected Therewith, 858 UNTS 41. 51 See e.g., Agreement concerning the Headquarters of the Permanent Court of Arbitration between the Permanent Court of Arbitration and The Kingdom of the Netherlands, The Hague, 30 March 1999. 388 Arbitration International, Volume 22 Number 3
law. It follows that the arbitrators may be at liberty to hear witnesses on oath even where the lex loci precludes arbitrators from administering oaths. Or, to take another example, the award is not subject to the requirement, known to many systems of municipal law, according to which it must be deposited with the local court.52
The specific procedural rules applicable to arbitrations between states, including rules concerning evidence, will be those set forth in the compromis, in any applicable arbitration treaty or, if the case is before an international institution such as the Permanent Court of Arbitration or a claims commission, in the institution's rules. The Hague Conventions of 1899 and 1907 also contain rules of procedure which apply to arbitrations between parties to the Conventions in the absence of other procedural rules. In addition, as discussed infra, there has Downloaded from evolved from the practice of states before international tribunals a number of procedural rules and practices which are generally applicable to arbitrations between states because of their widespread acceptance and application.
(c) Arbitrations between States and Private Parties http://arbitration.oxfordjournals.org/ The procedural law applicable to arbitrations between states and private parties is more problematic. Although such arbitrations have occurred since the mid- nineteenth century,53 the question of the applicable procedural law was not addressed in any meaningful way by a tribunal until the Aramco case54 in 1958. That case involved a dispute under a concession agreement between Saudi Arabia and the Arabian American Oil Company. With respect to the law applicable to the merits of the case, the compromis provided that the dispute would be resolved in accordance with the law of Saudi Arabia in so far as it involved matters within the jurisdiction of Saudi Arabia, and in accordance with the law by guest on December 8, 2016 deemed applicable by the arbitration tribunal in so far as matters beyond the jurisdiction of Saudi Arabia were concerned. The compromis was silent with respect to the procedural law applicable to the arbitration. Although the seat of the arbitration was Geneva, the tribunal concluded that considerations of sovereign immunity precluded Swiss law from governing the conduct of the arbitration:
Considering the jurisdictional immunity of foreign States, recognized by international law in a spirit of respect for the essential dignity of sovereign power, the Tribunal is unable to hold that arbitral proceedings to which a sovereign State is a Party could be subject to the law of another State. Any interference by the latter State would constitute an infringement of the prerogatives of fhe State which is a Party to the arbitration. This would render illusory the award given in such circumstances. For these reasons, the Tribunal finds that the Law of Geneva cannot be applied to the present arbitration.55
52 F.A. Mann, Studies in International Law (1973), p. 257. 53 See e.g., Egypt v. Suez Canal Co., Award of 6 July 1864, 55 British and Foreign State Papers 1004. 54 Saudi Arabia v. Arabian American Oil Co. (1958) 27 ILR 117. 55 ibid. pp. 155-156. Evidence in International Arbitration 389
The tribunal held that the conduct of the arbitration was to be governed by international law and particularly the rules set forth in the International Law Commission's Draft Convention on Arbitral Procedure:
It follows that the arbitration, as such, can only be governed by international law, since the Parties have clearly expressed their common intention diat it should not be governed by the law of Saudi Arabia, and since there is no ground for the application of the American law of the other Party. This is not only because the seat of the Tribunal is not in the United States, but also because of the principle of complete equality of the Parties in the proceedings before the arbitrators. It is true that the practice of the Swiss Courts has limited the jurisdictional immunity of States and does not protect that immunity, in disputes of a private nature, when the legal
relations between the Parties have been created, or when fheir obligations have to be performed, Downloaded from in Switzerland. The Arbitration Tribunal must, however, take that immunity into account when determining the law to be applied to an arbitration which will lead to a purely declaratory award. By agreeing to fix the seat of the Tribunal in Switzerland, the foreign State which is a Party to the arbitration is not presumed to have surrendered its jurisdictional immunity in case of disputes relating to the implementation of the 'compromis' itself. In such a case, the rules set forth in the Draft Convention on Arbitral Procedure, adopted by the International Law http://arbitration.oxfordjournals.org/ Commission of the United Nations at its fifth session (New York 1955), should be applied by analogy.56
A different result was reached in the BP case,57 which involved the expropriation of a petroleum concession in Libya. There, the arbitrator held that the procedural law of the arbitration was Danish law because the seat of the arbitration was Copenhagen. The arbitrator acknowledged that the application of municipal law to the arbitration imposed a limitation on Libya's sovereign immunity, but found such limitation to be 'within the limits of international law': by guest on December 8, 2016 The Tribunal cannot share the view that the application of municipal procedural law to an international arbitration like the present one would infringe upon such prerogatives as a State party to the proceedings may have by virtue of its sovereign status. Within the limits of international law, the judicial or executive authorities in each jurisdiction do, as a matter both of fact and of law, impose limitations on the sovereign immunity of other States within such jurisdictions.58
The Topco/Calasiatic59 case and the Liamco60 case also involved expropriations of petroleum concessions in Libya. In both cases, the arbitrators held that the municipal law of the seat of the arbitration was not applicable to the arbitration. In the Topco/Calasiatic case, the arbitrator adhered to the reasoning of the tribunal in the Aramco case, holding that, for reasons of sovereign immunity, the arbitration was governed by international law.61 In the Liamco case, the arbitrator found that it was an accepted principle of international law that the rules of procedure which
56 ibid. p. 156. 57 BP Exploration Co. (Libya) v. Government of the Libyan Arab Republic (1973) 53 ILR 297. 58 ibid. p. 147. 59 Texaco Overseas Petroleum Co./California Asiatic Oil Co. v. Government of the Libyan Arab Republic (1977) 53 ILR 389. 60 Libyan American Oil Co. v. Government of the Libyan Arab Republic (1977) 20 ILM 1. 61 (1977) 53 ILR 431. 390 Arbitration International, Volume 22 Number 3 govern an arbitration between a state and a private party are determined by agreement of the parties or, failing such agreement, 'by decision of the Arbitral Tribunal, independently of the local law of the seat of arbitration'.62 Because Liamco and Libya had not agreed on the procedural law to be applied, the arbitrator - like the tribunal in the Aramco case - decided that the rules set forth in the International Law Commission's Draft Convention on Arbitral Procedure should govern the conduct of the arbitration.63 In the Aminoil case,64 which involved the nationalisation of an oil concession in Kuwait, the American Independent Oil Company and the State of Kuwait agreed that the arbitration would be subject to 'any mandatory provisions of the place where the arbitration is held', which was Paris. The tribunal found, Downloaded from however, that the parties had not submitted the conduct of the arbitration to the municipal law of France. With respect to the parties' agreement that the arbitration would be subject to any mandatory provisions of the law at the seat of the arbitration, the tribunal said: http://arbitration.oxfordjournals.org/ this does not in the least entail of itself a general submission to the law of the tribunal's seat which was designated as Paris. In actual fact the Parties themselves, in the Arbitration Agreement, provided the means of settling the essential procedural rules, when they conferred on the Tribunal the power to 'prescribe the procedure applicable to the arbitration on the basis of natural justice and of such principles of transnational arbitration procedure as it may find applicable' (Article IV, 1), which was done by the Rules adopted on 16 July 1980. Having regard to the way in which the Tribunal has been constituted, its international or rather, transnational character is apparent. It must also be stressed that French law has always been very liberal concerning the procedural law of arbitral tribunals, and has left this to the free choice of the Parties who, often, have not had recourse to any one given national system. French law has thus befriended arbitrations the transnational character of which has been well in by guest on December 8, 2016 evidence.65 Thus, the tribunal in the Aminoil case concluded that, pursuant to the compromis and consistent with the law of the seat of the arbitration, it had the power to prescribe procedural rules 'on the basis of natural justice and of such principles of transactional arbitration procedure as it may find applicable'. In recent years, many arbitrations between sovereign states and private parties have been put beyond the reach of municipal law by the Convention on the Settiement of Investment Disputes between States and Nationals of Other States ('Washington Convention').66 The Washington Convention established the International Centre for Settlement of Investment Disputes (ICSID) to provide facilities for conciliation and arbitration of investment disputes between states and nationals of other states. The Washington Convention exempts such arbitrations from municipal law for procedural purposes. Under the terms of the Convention, state parties agree (i) that the procedures applicable to ICSID arbitrations shall be
62 (1981) 20 ILM 42. 63 ibid. p. 43. 64 American Independent Oil Co., Inc. v. Government of the State of Kuwait (1982) 66 ILR 518. 65 ibid. p. 560. 66 575 UNTS 160. Evidence in International Arbitration 391 governed by the Washington Convention (which, itself, constitutes international law) and the rules promulgated thereunder; (ii) that awards rendered by ICSID tribunals shall not be subject to any appeal in municipal courts or to any other remedy except those provided for in the Convention;67 and (iii) to enforce the pecuniary obligations imposed by an ICSID award as if it were a final judgment of a court of that state.68
III. DOCUMENTARY EVIDENCE (a) The Predilection for Documentary Evidence Downloaded from Historically, international arbitral tribunals have given greater weight to documentary evidence than to testimonial evidence. According to Sandifer:
Probably the most outstanding characteristic of international judicial procedure is the extent to which reliance is placed in it upon the written word, both in the matter of pleadings and of evidence, but especially the latter. It may be said that evidence in written form is the rule and http://arbitration.oxfordjournals.org/ direct oral evidence the exception.69
Although oral evidence is now common in international procedure, tribunals will generally treat documents which came into existence when the events giving rise to the dispute occurred as having more probative value than testimonial evidence. Witnesses are sometimes deliberately untruthful, truthful witnesses are sometimes mistaken in their recollection of facts, and even truthful witnesses who accurately recall the facts are sometimes discredited by adroit cross-examination so as to obscure the truth. On the other hand, contemporaneous documents that were generated without a view to improving either party's position in the dispute by guest on December 8, 2016 and which record or otherwise tend to prove the facts in issue are generally considered to be credible evidence, subject to any issues there may be as to the authenticity of the document. The reasons for the priority given to documentary evidence in international procedure were summarised by Bin Cheng as follows:
'Testimonial evidence', it has been said, 'due to the frailty of human contingencies is most liable to arouse distrust'. On the other hand, documentary evidence stating, recording, or sometimes even incorporating the facts at issue, written or executed either contemporaneously or shortly after the events in question by persons having direct knowledge thereof, and for purposes other than the presentation of a claim or the support of a contention in a suit, is ordinarily free from this distrust and considered of higher probative value.70
67 ibid. Article 53. 68 ibid. Article 54. 69 D. Sandifer, Evidence Before International Tribunals (revised edn, 1975), p. 197. 70 B. Cheng, General Principles of Law as Applied by International Courts and Tribunals (1953), pp. 318-319. 392 Arbitration International, Volume 22 Number 3
(b) Production of Documents As a general rule, the parties to an international arbitration are required to produce those documents upon which they rely to prove their case.71 The rules of most international tribunals are designed to prevent a party from being unfairly disadvantaged by the unexpected production of evidence by the other party. Thus, when a claimant files its memorial, it is expected to file at the same time all documents in its possession necessary to prove any factual issues raised in the memorial. Similarly, when the respondent files its counter-memorial, it must submit all documentary evidence upon which it relies for its defence and any counterclaim. The same rule applies to replies, rejoinders and other written Downloaded from pleadings. International tribunals are generally flexible in the application of this rule, however. As Judge Huber noted in the Island of Palmas case:
However desirable it may be that evidence should be produced as complete and at as early a stage as possible, it would seem to be contrary to the broad principles applied in international arbitrations to exclude a limine, except under the explicit terms of a conventional rule, every http://arbitration.oxfordjournals.org/ allegation made by a Party as irrelevant, if it is not supported by evidence, and to exclude evidence relating to such allegations from being produced at a later stage of the procedure.72
The parties must also have the opportunity to submit to the tribunal their observations on the evidence submitted by the other party. As Judge Bustamante put it:
The fair administration of justice requires that every document presented by one of the parties be known by the other or others in opportune time for discussing it and submitting to the 73 tribunal the observations that it deems necessary. by guest on December 8, 2016
(c) Discovery The right of discovery in international arbitration is generally limited to documents which are relied upon in the pleadings of the other party. This right is a corollary of the rule that parties to an international arbitration are supposed to produce those documents upon which they rely to prove their case. American- type discovery — under which the parties are required to disclose all relevant documents - is rarely used in international arbitration. As a general rule, a party to an international arbitration is under no obligation to produce documents adverse to its interests unless ordered to do so by the tribunal. On the other hand, a party to an international arbitration may request documents from the other party, provided that such documents are identified with reasonable specificity. If the requested documents are not produced by the other
71 ICSID Rules of Procedure for Arbitration Proceedings, r. 24; LCIA Arbitration Rules, art. 6.6; UNCITRAL Arbitration Rules, art. 18(2). 72 United Nations, Reports of International Arbitral Awards, vol. II, p. 841. 73 A. Bustamante, Derecho International Publico (1938), vol. 5, p. 428. Evidence in International Arbitration 393 party, the party requesting the documents may ask the tribunal for an order directing production of the documents. The decision to make such an order is entirely within the discretion of the tribunal unless the parties have agreed otherwise. Although a tribunal may order the production of documents, it does not have the power to compel production. If the tribunal orders the production of documents and the party against whom the order is made does not produce the documents without a satisfactory explanation, the tribunal may infer that the documents in question are adverse to the interests of the party that has failed to produce them. Also, the tribunal, or the requesting party with the consent of the tribunal, may be able to enlist the powers of the local municipal courts to compel the production of the documents. The availability of such judicial assistance is Downloaded from generally determined by the municipal law at the seat of the arbitration. Thus, Article 27 of the UNCITRAL Model Law provides:
The arbitral tribunal or a party with the approval of the arbitral tribunal may request from a
competent court of this State assistance in taking evidence. The court may execute the request http://arbitration.oxfordjournals.org/ within its competence and according to its rules on taking evidence.
(d) Authentication of Documents Because of the importance attached to documentary evidence by international arbitral tribunals, the authenticity of documents sometimes becomes an issue in international proceedings. Generally speaking, the rules concerning the production of original documents in international proceedings are less strict than in municipal law. It has long been established that the 'best evidence rule' which by guest on December 8, 2016 requires that the terms of a document be proven by production of the document itself is not applicable in proceedings before international tribunals.74 Moreover, the quality of photographic reproduction today is of such a high standard that it serves little purpose to require an original document unless authenticity is an issue. Consequently, international tribunals seldom require the submission of original documents. Indeed, in many cases — particularly international commercial arbitrations - in the interest of expediency and by tacit agreement of the parties, uncertified copies of original documents are routinely accepted without question by the tribunal. However, the use of fraudulent documents in cases before international tribunals — even cases involving sovereign states — while uncommon is not unknown.75 If the authenticity of a document is challenged, the party submitting the document must prove its authenticity by whatever evidence is appropriate in the circumstances of the case. International tribunals are generally flexible and pragmatic in their approach to the authentication of documents. The method of authentication will depend on the particular document involved and the
74 See e.g., Barcelona Traction (Second Phase) [1970] ICJ Rep. 98 (Sep. Op. Fitzmaurice). 75 See e.g., Case concerning Maritime Delimitation and Territorial Questions between Qatar and Bahrain [2001] ICJ Rep. 46. 394 Arbitration International, Volume 22 Number 3 circumstances surrounding it. A duly certified copy of the original document is usually deemed sufficient to prove the contents of the original. In some cases, however, production of the original document may be required, particularly if the authentication itself is in issue.
IV TESTIMONIAL EVIDENCE (a) General Principles Testimonial evidence, despite its acknowledged shortcomings, is an important means of fact-finding in the international judicial process. While documentary Downloaded from evidence is in principle preferable, it sometimes happens that the available documents are not sufficient in and of themselves to determine the facts in issue. In such case, the tribunal must rely in whole or in part upon testimonial evidence to reach a decision. Historically, witnesses seldom appeared before international tribunals. During http://arbitration.oxfordjournals.org/ its entire history, the Permanent Court of International Justice heard oral testimony in only one case.76 Today, however, oral testimony is common in international proceedings and the rules governing the admission and evaluation of testimonial evidence are essentially the same as those applicable to documentary evidence. Commenting on the oral phase of the Corfu Channel case (the first contentious case decided by the International Court of Justice), Rosenne observed:
The procedure for the examination of witnesses was characterized by its liberality, lack of
rigidity, and lack of strict adherence to municipal practice ... From the point of view of the by guest on December 8, 2016 Court, the object was that as much light as possible should be cast upon the matters to be discussed and the Parties should be given every opportunity to defend their point of view.77
Rosenne's comment is an apt description of the approach taken today by most international tribunals with respect to testimonial evidence. A party will generally be allowed to submit any testimonial evidence it deems necessary to establish its case, subject to the tribunal's power to control examination of the witness and evaluate his evidence.78 The general practice of international tribunals with respect to oral testimony is to allow counsel to examine witnesses subject to the control of the tribunal. Cross- examination by opposing counsel is invariably permitted, and the tribunal itself
This was the Case concerning Certain German Interests in Polish Upper Silesia. See M. Hudson, The Permanent Court of International Justice (1934), p. 502. S. Rosenne, The Law and Practice of the International Court (1965), p. 576. But see ICC Case No. 1512 in which the arbitrator, in a decision upheld by the English courts, declined to hear testimonial evidence because 'the arbitrator is satisfied that all relevant facts have been fully established and that there is no need to obtain testimonies or hear witnesses, the less so as the facts are simple and to a large extent undisputed, and the litigation centres on the interpretation of contractual documents and legislative or regulatory provisions'. Dalmia Dairy Industries Ltd v. National Bank of Pakistan [1978] 2 Lloyd's Rep. 269. Evidence in International Arbitration 395 may put questions to the witness. Ordinarily, the claimant's witnesses present testimony first, followed by the respondent's witnesses.79 Usually, the claimant and the respondent may also produce rebuttal testimony. In addition, the tribunal itself may call witnesses. However, the tribunal does not have the power to compel witnesses to attend the hearing or to testify. If a witness refuses to appear, the tribunal or a party with the consent of the tribunal may be able to apply to a local court for an order that the witness attend the hearing and give testimony. As with the production of documents, the availability of such judicial assistance in connection with witnesses depends on the municipal law in force at the seat of the arbitration.80 Downloaded from (b) 'Hearsay' Evidence International procedure does not preclude the admission of 'hearsay' evidence, i.e., evidence not based on the personal observation of the witness. As with other kinds of evidence, the issue is usually one of evaluation rather than admissibility. http://arbitration.oxfordjournals.org/ International tribunals will generally admit hearsay evidence, but the weight given such evidence will depend upon the circumstances of the case, including other evidence which either confirms or refutes the hearsay evidence.
(c) Affidavits and Witness Statements It is common practice for parties in international arbitrations to submit testimonial evidence in the form of written witness statements — sometimes referred to as 'affidavits' or 'depositions' - prepared ex parte, i.e., without the participation of the opposing party or the tribunal.81 Such statements are generally submitted on the understanding that the witness making the statement by guest on December 8, 2016 will be available during the oral phase of the proceedings for cross-examination or questions by the tribunal. Failure of the witness to appear for cross- examination, if requested to do so by the other party, will affect the weight given his written testimony by the tribunal and may result in that testimony being deemed inadmissible.
(d) Evaluation of Testimonial Evidence In international procedure, the tribunal has discretion to assess the weight of any evidence submitted to it. Testimonial evidence intrinsically involves problems of evaluation different than those that arise in connection with documentary evidence. Difficulties in the evaluation of documentary evidence usually concern
79 Occasionally, parties to an international arbitration agree to a procedure known as 'witness conferencing', whereby all witnesses and experts are examined and cross-examined jointly in teams. For a discussion of this process, see W. Peter, 'Witness Conferencing' in (2002) 18 Arb. Infl 47. 80 See e.g., UNCITRAL Model Law, Article 27. 81 Ex parte affidavits and witness statements are a feature of common law procedure. In civil law jurisdictions, testimony not taken before the court is usually taken by deposition before a judge or other competent authority in the presence of the opposing party. 396 Arbitration International, Volume 22 Number 3 interpretation of ambiguous documents and occasionally involve the authenticity of documents. The situation with testimonial evidence is different. Ambiguities in testimonial evidence, are, generally speaking, easily resolved by direct examination, cross-examination or questions from the tribunal. What is not easily resolved is the credibility of the witness. Evaluation of witness testimony often involves an assessment of the witness's truthfulness and objectivity. Such assessment will necessarily involve an element of subjectivity, particularly when the witness's testimony is neither corroborated nor impeached by other evidence. In such cases, the tribunal must assess the truthfulness of the witness on the basis of his demeanour and the intrinsic merit of his testimony. A witness's objectivity is often inferred from his relationship to the party on whose behalf he is testifying. Downloaded from
V EXPERT EVIDENCE It often happens that, to make necessary findings of fact, a tribunal will require expert evidence. Expert evidence has long been used in international http://arbitration.oxfordjournals.org/ arbitration.82 Such evidence may take the form of testimony, reports or inquiries. It is most often used to assist the tribunal with such technical matters as the valuation of claims, the cause of structural or material failure, accepted practice within a given industry and the technical aspects of boundary delimitation and demarcation. Expert evidence has also been used to prove such matters as the content of municipal law,83 the practice of states with respect to maritime claims and delimitation,84 variations in the name of a geographic feature,85 and the correct translation of foreign legislation.86 Whereas a witness testifies as to his knowledge of particular facts, an expert generally testifies as to his opinion or belief. This difference is illustrated in the by guest on December 8, 2016 formal declarations made by witnesses and experts appearing before the International Court of Justice. Every witness giving testimony before the Court makes the following declaration: 'I solemnly declare upon my honour and conscience that I will speak the truth, the whole truth and nothing but the truth'.87 Every expert makes the same declaration with the addition of the following words: 'and that my statement will be in accordance with my sincere belief'.88 Occasionally, the same individual may appear as both a witness and an expert in international proceedings.89 There is no general rule prohibiting such practice.
82 See e.g., Behring Sea Arbitration and particularly Article IX of the Treaty of Arbitration between Great Britain and the United States signed 29 February 1892, discussed in Moore, International Arbitrations (1898), vol. 1, pp. 798-799, 802. 83 Amco Asia Corp. and others v. Republic of Indonesia, (1984), 1 ICSID Rep. 458. 84 Guinea/Guinea Bissau Maritime Boundary Arbitration, (1985), 77 ILR 647. 85 Island of Palmas, (1928), United Nations, Reports of International Arbitral Awards, vol. II, p. 860. 86 Southern Pacific Properties (Middle East) Ltd v. Arab Republic of Egypt, (1988), 106 ILR 546. 87 Rules of the Court, art. 64. 88 ibid. 89 See e.g., South West Africa [1966] ICJ Rep. 9. Evidence in International Arbitration 397
Experts may be presented by the parties or appointed by the tribunal. In any event, experts are expected to be independent and objective. The tribunal is not bound by the conclusions of the expert, nor is a tribunal under any obligation to appoint an expert or order an expert inquiry when requested to do so by a party. Generally, a tribunal will only appoint an expert when it deems such an appointment useful in ascertaining the truth as to disputed facts. On the other hand, if a party offers its own expert evidence, such evidence will generally be admitted by the tribunal.
VI. SITE VISITS (DESCENTE SUR LES LIEUX) Downloaded from Occasionally it is useful for the tribunal or its experts to visit the place where the dispute arose, either to formally gather evidence or to acquaint the tribunal in a general way with the factual background of the case so as to enhance its appreciation of the factual arguments of the parties. In the Corfu Channel case, for example, the International Court of Justice on its own initiative dispatched a http://arbitration.oxfordjournals.org/ committee of experts to Albania and Yugoslavia to conduct certain investigations and experiments and report thereon. The evidence obtained by the experts figured prominently in the Court's decision.90 In the Beagle Channel case,91 which involved a territorial dispute between Argentina and Chile, the tribunal itself at the request of the parties visited the disputed area but made no formal findings of fact based on its observations. Indeed, its visit to the disputed area is nowhere mentioned in the award except in the summary of the proceedings. Nevertheless, the tribunal's visit to the site certainly enhanced its understanding of the very complex geographical situation involved in the case. Site visits are most often used in construction disputes, disputes involving the by guest on December 8, 2016 operation of industrial plants and in boundary and territorial disputes.
VII. MAPS AS EVIDENCE Maps are frequently submitted as evidence in cases involving boundary and territorial disputes. Maps may be advanced in support of a claimed boundary, a claim of territorial sovereignty or sovereign rights, or as evidence of names or locations of disputed geographical features. Maps are generally admissible, but their evidentiary value will depend on the circumstances of the case. Occasionally, maps form an integral part of a treaty such that they are direct or primary evidence and may be decisive. For example, in the Sovereignty Over Certain Frontier Lands case, the International Court of Justice decided the issue of territorial sovereignty on the basis of maps that were annexed to a treaty between Belgium and the Netherlands. The treaty had been drafted by a mixed boundary commission. The commission also prepared detailed survey maps and
9" [1949] ICJ Rep. 21. 91 52 ILR 93. 398 Arbitration International, Volume 22 Number 3 topographical maps which were signed by the commissioners and annexed to the treaty. The treaty itself provided in Article 3 that the maps had 'the same effect as though they were inserted in their entirety'. Thus, the maps were primary evidence of the boundary. As to their effect, the Court concluded:
These maps, in which the disputed plots are shown as belonging to Belgium were designed to become and did become part of the Convention and, in accordance with Article 3 thereof, had the same legal force as die Convention itself.92
In the Temple of Preah Vihear case, discussed supra, a map which was neither
prepared nor signed by the mixed boundary commission and which was not Downloaded from expressly incorporated in the boundary treaty nevertheless became an 'integral part' of the treaty setdement as a result of the parties' acceptance of the map as representing their agreement with respect to the location of the boundary. The importance of maps as evidence should not be overemphasised, however.
In most cases, maps are only indirect or secondary evidence which may or may http://arbitration.oxfordjournals.org/ not confirm conclusions drawn from treaties, decisions or other documents. In such cases, the maps will be carefully scrutinised by the tribunal and evaluated on the basis of the source of the cartographer's information. As the International Court of Justice said in the case concerning the Frontier Dispute between Burkino Faso and Mali:
Whether in frontier delimitations or in international territorial conflicts, maps merely constitute information which varies in accuracy from case to case; of themselves, and by virtue solely of their existence, they cannot constitute a territorial tide, that is, a document endowed by international law with intrinsic legal force for the purpose of establishing territorial rights. Of course, in some cases maps may acquire such legal force, but where this is so the legal force does by guest on December 8, 2016 not arise solely from their intrinsic merits: it is because such maps fall into the category of physical expressions of the will of the State or States concerned. This is the case, for example, when maps are annexed to an official text of which they form an integral part. Except in this clearly defined case, maps are only extrinsic evidence of varying reliability or unreliability which may be used, along with other evidence of a circumstantial kind, to establish or reconstitute the real facts.93
Parties frequently produce a multiplicity of maps purporting to prove their respective claims. If such maps originate from a variety of original sources and show unanimity over a long period of time with respect to a boundary or the name or location of a geographical feature, they may constitute important evidence. Often, however, the source of the cartographer's information is unknown. In such cases, the tribunal will be reluctant to attach much evidentiary value to the maps in question. It also frequently happens that maps - even 'official' maps prepared by governments - have merely been copied from previously existing maps and are not based on original sources of information.
92 [1959] ICJ Rep. 220. 93 [1986] ICJ Rep. 582. Evidence in International Arbitration 399
Such maps are hearsay evidence and entitied to litde evidentiary value, no matter how numerous, unless corroborated by other evidence. As Judge Huber stated in the Island of Palmas case:
If the arbitrator is satisfied as to the existence of legally relevant facts which contradict die statements of cartographers whose sources of information are not known, he can attach no weight to the maps, however numerous and generally appreciated they may be.94
VIII. LATE PRODUCTION OF EVIDENCE Downloaded from In any arbitration, time limits are established for the production of evidence. These time limits may be prescribed by the compromis, the arbitration rules or, as is usually the case, by the tribunal. In any event, the tribunal usually has discretionary authority to extend such time limits.
As a general rule, documentary evidence is to be submitted with whatever http://arbitration.oxfordjournals.org/ pleading it relates to, and consequently all such evidence is to be produced prior to the close of the written proceedings, i.e., before the oral proceedings commence. It often happens, however, that documentary evidence is submitted during the oral proceedings. In exceptional circumstances, it may even be submitted after the oral proceedings. If such evidence is submitted in response to a request by the tribunal, or if the other party consents to its submission, the evidence will invariably be admitted. Moreover, even when the other party objects to the late production of evidence, the evidence will usually be admitted subject to the right of the other party to comment on it and submit rebuttal evidence. The reason for this practice was explained by the Permanent Court of by guest on December 8, 2016 International Justice in the Free J^pnes case:
because the decision of an international dispute of the present order should not mainly depend on a point of procedure, the Court thinks it preferable not to entertain the plea of inadmissibility and to deal on their merits with such of the new French arguments as may fall within its jurisdiction.95
In the majority of cases in which late evidence has been accepted, there appears to have been no requirement that good cause be shown for late production. Rather, the tribunal's principal concern has been that it have all of the relevant evidence before it when deciding the case. But just as the tribunal has discretion to admit evidence submitted out of time, it has discretion to exclude such evidence, and a party who produces evidence beyond the prescribed time limit runs the risk that the tribunal will refuse to accept the evidence unless good cause is shown for the late production.96 In deciding whether to admit evidence that has been produced beyond the
94 United Nations, Reports of International Arbitral Awards, vol. II, p. 853. 95 Free Zones of Upper Savoy and the District of Gex, Series A/B, No. 46 (1932) 155-156. 96 See e.g., Norton v. Mexico, J.B. Moore, International Arbitrations (1898), vol. 2, p. 1355. 400 Arbitration International, Volume 22 Number 3
prescribed time limit, the tribunal may take into account such factors as whether the evidence was available to the party submitting it at the time when the evidence should have been produced;97 if so, whether, as a result of developments in the course of the arbitral proceedings the evidence has assumed an importance not apparent earlier;98 and whether admission of the evidence will unduly delay or disrupt the arbitral proceedings99 or otherwise prejudice the interests of the other party.100 Evidence withheld in bad faith as a tactical ploy to gain advantage in the proceedings will be excluded.101 In any event, if evidence is admitted after the prescribed time limit has expired, the other party has the right to comment on such evidence and to submit further evidence in rebuttal thereof.102 Downloaded from
IX. THE CRITICAL DATE A different kind of time constraint which involves the relevance rather than the admissibility of evidence is the so-called 'critical date'. In all cases, there is a point
in time in the factual chronology of the dispute beyond which the conduct of the http://arbitration.oxfordjournals.org/ parties and other events can no longer affect the decision of the case. This time is called 'the critical date'. The concept of the critical date was explained by Fitzmaurice in the United Kingdom's pleadings before the International Court of Justice in the Minquiers and Ecrehos case as follows:
the theory of the critical date involves ... that, whatever was the position at the date determined to be the critical date, such is still the position now. Whatever were the rights of the Parties dien, those are still the rights of the Parties now. If one of them then had sovereignty, it has it now, or is deemed to have it. If neither had it, then neither has it now ... The whole point, the whole raison d'etre, of the critical date rule is, in effect, that time is deemed to stop at that date. by guest on December 8, 2016 Nothing that happens afterwards can operate to change the situation as it then existed. Whatever that situation was, it is deemed in law still to exist; and the rights of the parties are governed by it.103
This is not to say that evidence of events occurring after the critical date is always irrelevant. The tribunal may consider facts occurring after the critical date in order to evaluate facts occurring prior to that date. As Fitzmaurice explained it:
97 See e.g., Permanent Court of Arbitration, Proceedings of the Tribunal of Arbitration Convened at The Hague under the Provisions of the Special Agreement between the United States of America and Norway concluded at Washington, June 30th, 1921, for the Submission to Arbitration of Certain Claims of Norwegian Subjects against the United States arising out of Certain Requisitions of the United States Shipping Board Emergency Fleet Corporation (Van Langenhuysen Brothers, The Hague, 1922), pp. 16-32, 100. 98 Hidetomo Shinto v. Government of the Islamic Republic of Iran, (1988), 19 Iran-US CTR 328. 99 See e.g., Middle East Management and Construction Corp. v. Government of the Islamic Republic of Iran, (1985), 9 Iran-US CTR 343. 100 See e.g., Harris International Telecommunications v. Government of the Islamic Republic of Iran, (1987), 17 Iran-US CTR 45. 101 See e.g., PCIJ, Series D, Acts and Documents Concerning the Organization of the Court, (1936), Third Addendum to No. 2, Elaboration of the Rules of Court of March 11, 1936, p. 191. 102 See e.g., Rules of the International Court of Justice, art. 56. 103 Minquiers and Ecrehos case [1953] ICJ Rep., Pleadings, vol. 2, p. 64. Evidence in International Arbitration 401
Just as the subsequent practice of parties to a treaty, in relation to it, cannot alter the meaning of the treaty, but may yet be evidence of what that meaning is, or what the parties had in mind in concluding it, so equally events occurring after the critical date in a dispute about territory cannot operate to alter the position as it stood at that date, but may nevertheless be evidence of, and throw light on, what the position was.104
The critical date is a matter of substance, not procedure, and it involves the relevance of the evidence, not its admissibility.105 Discussion of the critical date is frequently found in cases involving territorial disputes because such cases typically involve conduct over protracted periods of time, often decades or even centuries. As Fitzmaurice observed, however, 'Such a date must obviously exist in all litigated disputes, if only for the reason that it can Downloaded from never be later than the date on which legal proceedings are commenced'.106 The critical date forecloses the use of evidence of self-serving conduct intended by the party concerned to improve its position in the arbitration after the dispute has arisen.107 It may also foreclose the use of evidence that is simply irrelevant because of the facts involved. In the Island of Palmas case,108 for example, the http://arbitration.oxfordjournals.org/ United States and the Netherlands both claimed territorial sovereignty over a small, isolated island situated midway between the Philippines and the Netherlands East Indies. The United States based its claim on the 1898 Treaty of Paris, by which Spain purported to cede the island of Palmas to the United States. The Netherlands, on the other hand, based its claim on an alleged peaceful and continuous display of state authority over the island for many years up until and after the Treaty of Paris. After noting that Spain could not transfer to the United States more rights than she herself possessed, Judge Huber went on to say: by guest on December 8, 2016 The essential point is therefore whether the Island of Palmas (or Miangos) at the moment of the conclusion and coming into force of the Treaty of Paris formed a part of the Spanish or Netherlands territory.109
Thus, the critical date was that on which the Treaty of Paris entered into force. After considering the evidence, Judge Huber held that, at the time of the treaty, the Netherlands - not Spain - had tide to the island, such title having been acquired by the continuous and peaceful display of sovereignty over a long period of time up until the critical date. In most cases, the critical date will be the date on which the dispute crystalised or the date when the legal proceedings commenced. The critical date is not always obvious, however, and may be a matter of contention between the parties, as explained by Jennings with reference to the Minquiers and Ecrehos case:
104 ibid. p. 92. 105 Oppenheim's International Law (9th edn, 1996), vol. I, pp. 711-712. 106 G. Fitzmaurice, 'The Law and Procedure of the International Court of Justice, 1951—4: Points of Substantive Law, Part IP in (1956-57) 32 BYIL 20. 107 Minquiers and Ecrehos case [1953] ICJ Rep. 59. 108 United Nations, Reports of International Arbitral Awards, vol. II, p. 829. 109 ibid. p. 843. 402 Arbitration International, Volume 22 Number 3
It will be remembered that the French, relying upon a Fisheries Agreement of 1839, tried to establish that it was only necessary for them to show a French title at that date in order to exclude the relevance of evidence of acts of sovereignty by either party subsequent to 1839. It would have been a great advantage to the French if this had been accepted by the Court as the critical date, because the bulk of acts of sovereignty since 1839 greatly favoured the British case. The British argument naturally favoured a more recent critical date.110
Although not generally referred to as such, the notion of a critical date figures in most expropriation cases in connection with the valuation of the expropriated property. In principle, a party whose property has been expropriated is entided to compensation for the value of the property at the time of the taking, and it is generally recognised that the valuation of expropriated property must disregard Downloaded from events that were not reasonably foreseeable at the time of the expropriation. Thus, in the Lighthouses case, the Permanent Court of Arbitration said:
the damage suffered by the firm can only be assessed by reference to data existing at the time
when the concession was taken over. Subsequent events, which were unforeseen at that time http://arbitration.oxfordjournals.org/ both by the Greek Government which seized the concession and by the firm which was dispossessed of it, cannot be taken into consideration in a case of a grant of compensation which ought to have been not only determined but also put at the disposal of a concessionaire before the latter's removal.'''
The critical date in most expropriation cases will be the date of the taking; evidence of events after that date will be irrelevant for purposes of valuation except to the extent that such events were foreseeable at the time of the taking. The subdety involved in the notion of foreseeability is illustrated by the decision
of the Iran-United States Claims Tribunal in the Phillips case, where the tribunal by guest on December 8, 2016 held that the expropriated joint services agreement should be valued on the basis of the oil prices foreseen at the time of expropriation, rather than the prices actually prevailing at that time or the prices that in fact were realised subsequent to the expropriation:
In order to estimate what revenue could have reasonably been expected in September 1979 to be received from the sales of the oil to be produced under the JSA, an assessment has to be made of what oil prices would have been foreseen in September 1979 to prevail on world markets during the remaining years of the JSA. While experience shows that forecasting future crude oil prices is difficult and open to a high risk of being proved wrong by the subsequent realities of the actual market, the Tribunal's objective here is to determine the range of expectations that seemed reasonable in September 1979, not the accuracy of those expectations in fact.112
110 R.Y Jennings, The Acquisition of Territory in International Law (1963), p. 33. 111 Lighthouses Arbitration, (1956), 23 ILR 301. '12 21 Iran-US CTR 128. Evidence in International Arbitration 403
X. EVIDENCE OF INTERESTED PERSONS Although the municipal law of certain states prohibits parties from appearing as witnesses, there is no general rule in international arbitration that precludes the admission of evidence of interested persons. Such evidence has long been accepted by international tribunals.113 As Commissioner Nielson explained in the Dillon case:
Unimpeached testimony of a person who may be the best informed person regarding transactions and occurrences under consideration cannot properly be disregarded because such a person is interested in a case. No principle of domestic or international law would sanction such an arbitrary disregard of evidence.114 Downloaded from
Today, it is common for interested persons from both the public sector and the private sector to give evidence before international tribunals. Consular and diplomatic representatives and military officers have appeared as witnesses in
numerous cases before the International Court of Justice, the Permanent Court of http://arbitration.oxfordjournals.org/ Arbitration and ad hoc tribunals; corporate officers and executives routinely give testimony in commercial arbitrations in which their employer is a party. The weight given the evidence of interested persons will take into account such factors as whether the evidence is corroborated, whether other evidence could have been obtained with reasonable effort, whether the evidence is contradicted by other evidence, the inherent plausibility of the evidence, the credibility of the person submitting the evidence and the opportunity for cross-examination. As the American-Mexican Claims Commission put it, the evidence of interested persons: by guest on December 8, 2016
must of course be considered in the light of tests applicable to witnesses generally, the tests as to a person's sources of information and his capacity to ascertain and his willingness to tell the truth.115
XL EVIDENCE OBTAINED IN SETTLEMENT NEGOTIATIONS Because parties frequently compromise claims which they consider well-founded in order to reach a settlement, an international tribunal as a general rule will not consider evidence consisting of statements, admissions or proposals made in the course of settlement negotiations. Thus, the Permanent Court of International Justice said in the Chorzow Factory case:
113 See e.g., Montijo v. Guatemala,].^. Moore, International Arbitrations (1898), vol. 2, pp. 1434—1435. 114 Dillon v. Mexico, United States and Mexico General Claims Commission, Opinions of Commissioners (1929), p. 65. 115 Klingv. Mexico, United States and Mexico General Claims Commission, Opinions of Commissioner (1931), p. 47. 404 Arbitration International, Volume 22 Number 3
the Court cannot take into account declarations, admissions or proposals which the Parties may have made during direct negotiations between themselves, when such negotiations have not led to a complete agreement.116
In the case concerning the Frontier Dispute between Burkina Faso and Mali, a chamber of the International Court of Justice referred to the above-quoted statement of the Permanent Court of International Justice as a 'firmly established rule'.117 An issue may arise, however, as to whether particular evidence in fact was obtained through setdement negotiations. Thus, in the Pepsico case the Iran- United States Claims Tribunal deemed admissible a letter which the respondents Downloaded from argued had been written in connection with setdement discussions between the parties. The tribunal found that the letter was not an offer of setdement but rather a normal business communication acknowledging certain accounts receivable.118 http://arbitration.oxfordjournals.org/ XII. PRIVILEGED EVIDENCE International tribunals, like municipal courts, recognise certain kinds of evidence as 'privileged' or exempt from production. A claim of privilege invariably raises the problem of reconciling the search for the truth as to disputed facts with the protection of interests that are considered fundamental to society, such as national security and the relationship between lawyers or physicians and their clients. If evidence is privileged, a party is under no obligation to produce it. The extent to which certain evidence is privileged will generally depend on the law applicable to the arbitration and the facts of the case. by guest on December 8, 2016 In arbitrations governed by municipal law, the existence and scope of privilege will be determined by the law of the seat of the arbitration. The laws of most states protect military secrets and communications between a doctor or a lawyer and his client from disclosure in arbitral proceedings. In commercial arbitrations, parties occasionally resist the production of evidence on the ground that it contains proprietary or confidential business information. If the parties have agreed to make the IBA Rules of Evidence applicable to the arbitration, a party seeking to protect the confidentiality of business secrets may be able to avail itself of article 9(2) of the Rules, which provides:
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 ...
116 PCIJ, Series A, No. 17, p. 51. 117 [1986] ICJ Rep. 632. 118 Pepsico, Inc. v. Government of the Islamic Republic of Iran and £amzam Bottling Companies, (1986), 13 Iran-US CTR 28. Evidence in International Arbitration 405
(e) grounds of commercial or technical confidentiality that the Arbitral Tribunal determines to be compelling;
Absent agreement of the parties, however, business secrets are not as a general rule privileged under municipal law. A party who refuses to produce evidence on the ground that it would disclose proprietary or confidential business information risks an adverse inference. In proceedings before international tribunals, concerns about business secrets are usually dealt with by confidentiality agreements which are enforceable in municipal courts,119 or by redaction of the documents of concern.
The notion of privilege has also arisen occasionally in proceedings governed by Downloaded from international law, but no general rules have evolved. For example, in the Corfu Channel case, the International Court of Justice requested the United Kingdom to produce certain naval orders that had been dispatched to the destroyer Volage, one of the British ships damaged by mines in the incident that gave rise to the case.
The United Kingdom refused to produce the orders, pleading 'naval secrecy'. http://arbitration.oxfordjournals.org/ The Court declined to draw an adverse inference from the United Kingdom's failure to produce the orders. It dismissed the matter with the enigmatic comment that:
Those documents were not produced, the Agent pleading naval secrecy; and the United Kingdom witnesses declined to answer questions relating to them. It is not therefore possible to know the real content of these naval orders. The Court cannot, however, draw from this refusal to produce the orders any conclusions differing from those to which the actual events gave rise.120
In the Tihomir Blaskic case, on the other hand, the International Criminal by guest on December 8, 2016 Tribunal for the Former Yugoslavia ordered the production of certain documents, rejecting Croatia's claim of privilege on the basis of national security. The tribunal's decision in this regard turned on its interpretation of its organic act, the Statute of the International Tribunal adopted by the United Nations Security Council in 1993.121 The tribunal said:
It would be contrary to the spirit and the language of the Statute and to the nature and purpose of the International Tribunal to permit a State to invoke, absolutely, a national security privilege. Further, such a position would jeopardize the International Tribunal's obligation to ensure a fair and expeditious trial and to afford the accused rights guaranteed by the Statute, for which access to evidence is a sine qua non.122
119 See e.g., IBA Rules of Evidence, art. 9(3), which provides, 'The Arbitral Tribunal may, where appropriate, make necessary arrangements to permit evidence to be considered subject to suitable confidentiality protection'. '20 [1949] ICJ Rep. 32. i2i S/RES/827 (1993). 122 Tihomir Blaskic, International Tribunal for the Prosecution of Persons Responsible for Serious Violations of International Humanitarian Law Committed in the Territory of Former Yugoslavia since 1991, Decision on the Objection of the Republic of Croatia to the Issuance of Subpoenae Duces Tecum, (1997), p. 62. 406 Arbitration International, Volume 22 Number 3
In other cases, states have agreed to produce evidence even though it allegedly involved national security. For example, in the Godinez Cruz case,123 the Government of Honduras, at the request of the Inter-American Court of Human Rights, produced evidence concerning the organisation of its armed forces. Honduras was permitted to present the evidence in a closed session of the Court. The reality of the situation, however, is that states will not reveal to international tribunals information that would compromise their national security. The dilemma this poses, not only for the fact-finding process but for the process of international arbitration in general, has been aptly summed up by
Reisman as follows: Downloaded from
Undoubtedly, it is vital for a decision maker, whether national or international, to have all the data relevant to a particular matter before him in order to appreciate the problem and to be capable of rendering a decision consonant with the minimum and maximum goals of his public order ... On the other hand, a rule that would require a state to disclose all the documents in its possession bearing on an issue in litigation would force many states to refuse to adjudicate, lest http://arbitration.oxfordjournals.org/ they endanger themselves. Disclosure of many documents might reveal their source which could jeopardise individuals, weaken intelligence systems, and in severe cases occasion international incidents ... Concerns such as these must be accepted as valid exclusive interests, recognized by the public order of the most comprehensive international community. Resort to adjudication of disputes should not require renunciation of these interests. From a practical standpoint, it is clear that no state will renounce them, and the result will be either evasion of the rule, which would be most deleterious to perspectives of authority, or decreased resort to international adjudication.124 by guest on December 8, 2016 XIII. FRAUDULENT EVIDENCE An award procured through fraudulent evidence is, in principle, a nullity. A mere allegation of fraud is not sufficient to render the award null, however; for this purpose, the fraudulent basis of be award must be established by a tribunal which is competent to decide the matter or by some other means. If the fraud is discovered before the award is made, the tribunal will disregard the evidence and may draw such adverse inferences as the circumstances warrant. The gravest effect of the discovery of fraudulent evidence prior to the award may be its influence on the arbitrator's personal conviction as to the truthfulness and integrity of the party that has submitted the evidence. That conviction will ultimately be manifested in the arbitrator's findings of fact, which are generally beyond the reach of any appeal. If the fraud is not discovered until after the award has been made, the award may be subject to revision or nullification. Various international treaties and
123 Inter-American Court of Human Rights, Judgment 20 January 1989, Sen C, No. 5 (1989). 124 W.M. Reisman, Nullity and Revision (1971), pp. 601-602. Evidence in International Arbitration 407 conventions,125 municipal laws,126 arbitration rules127 and arbitration agreements128 have provided for revision or nullification of awards procured by fraud. For this purpose, fraud has sometimes been treated as a 'new fact'129 or 'essential error'.130 As Justice Roberts, the umpire in the Sabotage cases before the United States-Germany Mixed Claim Commission, stated:
Every tribunal has inherent power to reopen and to revise a decision induced by fraud. If it may correct its own errors and mistakes, a fortiori it may, while it still has jurisdiction of a cause, correct errors into which it has been led by fraud and collusion.131
Problems arise, however, when the fraud is discovered after the tribunal has Downloaded from become functus officio. If the arbitration is governed by municipal law, the party alleging fraud will usually have a remedy in the municipal courts of the seat of the arbitration132 or the place of enforcement.133 If the arbitration is governed by international law, however, the situation is more problematic: the party alleging
fraud may have to rely on diplomatic channels, sometimes in combination with http://arbitration.oxfordjournals.org/ municipal courts and legislative bodies, to resolve the matter.134
125 The first bilateral treaty to provide for revision appears to be the treaty of 23 July 1898 between Italy and Argentina, which provided for revision of the award in the event that 'the judgment has been based upon a false or erroneous document'. The first multilateral treaty to deal with revision was the Hague Convention of 1899, which provided that the parties to an arbitration could reserve in the compromis the right to demand revision of the award on the ground of the discovery of 'some new fact calculated to exercise a decisive influence upon the award'. The travaux preparatories of the Convention make clear that, for purposes of revision, fraud constitutes a 'new fact'. 126 See e.g., Belgium's Judicial Code, Sixth Part; Arbitration, which provides in art. 1704(3) that an award may be
set aside 'if it was obtained by fraud'. by guest on December 8, 2016 127 See e.g., ICSID's Rules of Procedure for Arbitration Proceedings, r. 50. 128 See e.g., art. 11 of the compromis signed by Guinea and Guinea-Bissau on 17 February 1983, 77 ILR 644. 129 The Hague Conventions of 1899 and 1907 provide for revision of arbitral awards on the ground of the discovery of a decisive 'new fact'. The travaux preparatories make clear that for purposes of revision and nullification, fraud constitutes a 'new fact'. The Proceedings of the Hague Peace Conference, The Conference of 1899 (1920), p. 753. 130 Annuaire de ITnstitut de Droit International (1877), p. 87. 131 Mixed Claims Commission, United States and Germany, Administrative Decisions and Opinions of a General Mature (1933-1939), p. 1118. 132 Provision in municipal law for the setting aside of an award procured by fraud may be express, as in England where Arbitration Act 1996, s. 68(2)(g) provides that an award may be challenged on the ground that it was 'obtained by fraud'; or it may be implied, as in France where the provisions of the New Code of Civil Procedure (NCPC) concerning the nullification of international awards make no express reference to fraud, but the courts have held that an international award procured by fraudulent means violates public policy and may be set aside on that ground under art. 1502 of the NCPC. European Gas Turbines v. Westman International, Cour d'appel de Paris, 30 November 1993, Rev. Arb. 194, 359. 133 Article V(2)(b) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards provides: 'Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that ... [t]he recognition or enforcement of the award would be contrary to the public policy of that country'. 134 For example, in the Weil and Al Abra cases decided by the United States-Mexican Claims Commission, Mexico made payments under the awards to the USA, but protested through diplomatic channels that the awards had been procured through fraud and perjury by the American claimants. The United States Congress enacted legislation authorising the President of the United States to investigate the allegations of fraud and, if such allegations were found to be true, to withhold further payments under the awards until the cases were retried. This legislation was subsequently amended to authorise the Attorney General to bring 408 Arbitration International, Volume 22 Number 3
The submission of false evidence to an international tribunal may not be intentional. In the Behring Sea case, the United States submitted as evidence translations of various documents from Russian archives which were intended to prove that, prior to Russia's cession of Alaska to the United States in 1867, Russia had exclusive jurisdiction and rights to fur seals in the Behring Sea. Upon learning that the translations were false and misleading, the agent of the United States notified the British agent of that fact and withdrew the translations from evidence. Although the United States was responsible for the submission of the fraudulent translations, the culpable party appears to have been the translator. According to Moore: Downloaded from
It appears that the original translator of the documents, a native Russian named Ivan Petroff, with a view to ingratiate himself with the Government of the United States and to impress upon it the importance of the Alaskan archives, in the hope that he might be employed to classify and translate them, made what Mr. Foster described as 'an astounding series of false translations'.135 http://arbitration.oxfordjournals.org/
XIV CONCLUSIONS International arbitrations vary considerably in terms of the nature of the parties, the subject matter of the dispute, the law governing the dispute and the law governing the arbitration itself. Nevertheless, various principles and rules of evidence have emerged from the process of international arbitration over the past two centuries which are generally applicable to all arbitrations unless the parties agree otherwise. These principles and rules represent a combination of civil law
and common law concepts. by guest on December 8, 2016 International arbitral procedure is characterised by the absence of restrictive rules governing the form, submission, admissibility and evaluation of evidence. The general approach of international tribunals is to keep open all avenues for the submission of evidence that will assist the tribunal in establishing the truth with respect to disputed facts. All evidence, documentary and testimonial, is generally admissible. The tribunal itself determines the relevance, materiality and probative value of the evidence. Documentary evidence is generally given more weight than testimonial evidence. Contemporaneous documents generated without a view to improving either party's position in the dispute are considered to be more reliable evidence than the testimony of a witness who may be mistaken in his recollection of the facts or deliberately untruthful.
suit in the US Court of Claims to determine whether the awards were obtained by fraud and, if so, providing for the return of the remaining funds to Mexico. The Court of Claims then found that the awards in both the Weil case and the Al Abra case were procured by fraud. The United States subsequently returned to Mexico all amounts awarded in the two cases. This required the enactment of further legislation to appropriate the necessary funds, because certain amounts had already been distributed to the claimants by the US Government. See Moore, International Arbitrations (1898), vol. 2, pp. 1324—1348. J.B. Moore, International Arbitrations (1898), vol. 1, p. 815. Evidence in International Arbitration 409
Each party has the burden of proof with respect to the facts necessary to establish its case and is required to produce those documents upon which it relies for that purpose. As a general rule, a party to an international arbitration is under no obligation to produce documents adverse to its interests unless ordered to do so by the tribunal. International tribunals generally have the power to require the production of documents, but do not have the power to compel such production. However, the failure of a party to produce evidence in its possession may give rise to an inference that the evidence is adverse to the interests of that party. Depending on the law governing the arbitration, the tribunal may be able to enlist the powers of the municipal courts at the seat of the arbitration to compel production. Downloaded from In international arbitration, the standard of proof used by the tribunal to determine whether a party has met its burden of proof with respect to a particular issue, although seldom articulated, is usually that of 'the proponderance of the evidence' or Tintime conviction dejuge'. In cases involving allegations of conduct contra bonos mores, a higher standard such as 'beyond a reasonable doubt' may be applied. http://arbitration.oxfordjournals.org/ In principle, documentary evidence is to be submitted with whatever pleading it relates to. However, international tribunals generally have the power to permit the late production of documents and typically do so on the ground that the dispute should be decided on the basis of the facts and the law involved rather than a point of procedure. Late production may be denied, however, if it will unduly delay the arbitral proceedings or unfairly prejudice the interests of the other party. To avoid such prejudice, if late production is allowed, the other party must have the opportunity to comment on the evidence involved and submit rebuttal evidence. Although documentary evidence is preferred, testimonial evidence is common by guest on December 8, 2016 in international arbitration and is often an important means of fact-finding, particularly when the documentary evidence is not sufficient to determine the facts in issue. Witnesses are examined and cross-examined by counsel under the direction of the tribunal. Testimonial evidence is often submitted in the form of written witness statements, but in such case the witness is expected to be available for cross-examination during the oral phase of the proceedings. In international arbitration, as in municipal law, direct evidence is generally preferred over indirect evidence. However, international tribunals often make presumptions or draw inferences on the basis of indirect evidence when the direct evidence is not sufficient to decide the matter. International tribunals also take judicial notice of facts which are so well known or so easily verified as to make proof superfluous, as well as of the applicable law. Expert evidence is commonly used in international arbitrations to assist the tribunal with such technical matters as the valuation of claims, the cause of structural or material failure, accepted practices within a given industry and other matters requiring specialised expertise. Such evidence may take the form of testimony, reports or inquiries. The expert may be appointed by the tribunal or by a party, but in any event the expert is expected to be independent and objective. The tribunal is not bound by the expert's opinion. 410 Arbitration International, Volume 22 Number 3
Another form of fact-finding used in international arbitration is the descente sur les lieux or site visit. In construction disputes, disputes involving the operation of industrial plants and in boundary and territorial disputes, it is often useful for the tribunal or experts appointed by the tribunal to visit the place where the dispute arose, either to formally gather evidence or to acquaint the tribunal in a general way with the factual background of the case. As in most municipal legal systems, evidence obtained in setdement negotiations and evidence that is privileged for reasons of national security or a professional relationship is exempt from production in international arbitration. Fraudulent evidence will be disregarded by the tribunal if the fraud is discovered before the award is made. If the fraud is not discovered until after the Downloaded from award is made, the award may be subject to revision or nullification. http://arbitration.oxfordjournals.org/ by guest on December 8, 2016
The Plaintiff's Dilemma: Illegally Obtained Evidence and Admissibility in International Adjudication Author(s): W. Michael Reisman and Eric E. Freedman Source: The American Journal of International Law, Vol. 76, No. 4 (Oct., 1982), pp. 737-753 Published by: American Society of International Law Stable URL: http://www.jstor.org/stable/2201551 Accessed: 08-12-2016 19:36 UTC
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This content downloaded from 128.59.176.2 on Thu, 08 Dec 2016 19:36:41 UTC All use subject to http://about.jstor.org/terms THE PLAINTIFF'S DILEMMA: ILLEGALLY OBTAINED EVIDENCE AND ADMISSIBILITY IN INTERNATIONAL ADJUDICATION
By W. Michael Reisman and Eric E. Freedman*
A suit cannot be pressed, whether on the domestic or international level, without supporting evidence. The processes of gathering such evidence are carefully regulated in many developed legal systems, in part because experi- ence has shown that too zealous a pursuit of evidence can easily transform institutions designed to resolve conflict into a rationalization and a setting for possibly even more rancorous conflict. When some part of the state apparatus is prosecuting a case, liberal democracies have often imposed more stringent regulations as part of what we may call, in a nondocumentary sense, the "constitutional" or "rule of law" tradition, that continuing compact between governors and governed about restraint in the use of official power. In any system of "rule of law," norms permitting as well as norms restraining the overly zealous collection of evidence for judicial purposes are under con- tinuing stress. Defendants plead that judicial inquiry is being exploited as an excuse to conduct wide-ranging interventions into protected private spheres. Potential plaintiffs claim that they cannot prove their cases unless evidence completely within the control of the defendant is discovered. If the gravamen of the dispute is not merely a personal injury, but an allegation that the defendant, in not "playing by the rules," is harming the entire- community, the plaintiff may argue with some cogency that prosecution of the case to his advantage, as well as vindication of the relevant norms to the community's, will be rendered impossible. The government apparatus bringing criminal or civil suits on behalf of the community often lodges a similar argument. With the extraordinary growth in the technology of crime, government personnel frequently maintain that they are unable to gather evidence for prosecution and for the protection of public order unless restraints on the gathering of evidence are relaxed.' This claim eventually stirs and then is countered by the ancient fear that the apparatus of justice may degenerate into little more than another instrument of elite control over an intimidated rank and file.2 In international adjudication, the problem is, if anything, aggravated. For- mally speaking, there is no public prosecutor jure gentium; virtually all adju- dications are initiated and conducted by states and against states. Compulsory and effectively sanctioned methods for securing necessary evidence, devices such as the interrogatory, discovery, and the subpoena duces tecum found in
* Of the Board of Editors and of the California Bar, respectively. ' See, e.g., Israel, Legislative Regulation of Searches and Seizures: The Michigan Proposals, 73 MICH. L. REV. 222 (1974). 2 See, e.g., Amsterd4m, Perspectives on the Fourth Amendment, 58 MINN. L. REV. 349 (1974); Levin & Cohen, The Exclusionary Rules in Nonjury Criminal Cases, 1 19 U. PA. L. REV. 905 (1971); Weinreb, Generalities of the Fourth Amendment, 42 U. CHI. L. REV. 47 (1974).
737
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many domestic legal systems, do not exist. The "rule in Parker's case,"3 which admonishes states to yield all the information pertinent to the suit and under their control, is often an empty piety; even if the defendant-state were willing to inventory all the pertinent evidence it had, there is really no way a plaintiff- state can compel it to surrender evidence that may be indispensable to the prosecution of its case. Hence, in international law, even more than in domestic systems, pressure may mount for the unilateral (and in some instances unlaw- ful) gathering of evidence. But unilateral methods can themselves become a new source of conflict. This is, in short, the plaintiffs dilemma. The plaintiffs dilemma confronts international tribunals with difficult and important choices. A municipal court can have its cake and eat it, too: when confronted with evidence secured unlawfully by a government department, it has the option of accepting the evidence while at the same time penalizing the specific agent responsible for its acquisition. But since international tri- bunals cannot penalize particular officers within a state, they do not have this option. International decision makers, when presented with claims supported by illegally obtained evidence, must balance the needs of a good faith plaintiff to secure evidence for its case against the rights of the defendant to the integrity of its own processes of confidentiality and secrecy. Yet the decision maker must also consider the more general need of the international com- munity to maintain respect for the "sovereignties" of states. Because world order may be seriously threatened by evidentiary incursions, the international tribunal must be very sensitive to the provocativeness of an unlawful gathering of evidence and the consequences it may precipitate, no matter how damning the evidence retrieved may be.
It is commonly acknowledged that "the practice of international tribunals in the admission of evidence has developed a pattern comparable to that of the liberal system of procedure in the civil law countries."4 But scholars differ as to the reasons. "Anglo-American law," writes Sandifer, a commentator quite representative of the general view, "has exerted only a minor influence
3See W. M. REISMAN, NULLITY AND REVISION 593-94 (1971):
The most extreme statement of the international burden of disclosure is found in the Parker Claim before the United States-Mexican General Claims Commission in 1927. In this case, the commission held that the respondent government was under an "obligation to lay before the Commission all evidence within its possession to establishthe truth whatever it may be" and proceeded to declare that:
the parties before this Commission are sovereign nations who are in honor bound to make full disclosures of the facts in each case so far as such facts are within their knowledge or can reasonably be ascertained by them. The Commission, therefore, will confidently rely upon each Agent to lay before it all of the facts that can reasonably be ascertained by him concerning each case no matter what their effects may be.
The rule in Parker's case has been cited with approval by other tribunals, and similar high burdens of disclosure appear in many compromis [footnotes omitted].
4 D. SANDIFER, EVIDENCE BEFORE INTERNATIONAL TRIBUNALS 176 (1975).
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on the matter of the admission of evidence."5 Sandifer suggests that this differential influence of civil and common law states derived from the relatively greater participation of civil-law-trained lawyers in the conduct of interna- tional tribunals.6 Lauterpacht, in contrast, attributed the lesser influence of Anglo-American evidentiary rules to their inherent inappropriateness for in- ternational tribunals:
The question of rules of evidence applied by international tribunals shows . . . that international judicial settlement may be relied upon to produce, independently of any particular system of law, rules appropriate to its own requirements and circumstances. Thus, the history of inter- national arbitration shows that whatever may be the merits of the strict Common Law rules regulating the admissibility of evidence and of bur- den of proof, it is not practicable to follow them in international litigation. They are not followed there; in fact, they have been expressly repudiated. There are therefore in this matter no longer two schools of thought in international law; there is one rule of international law on the subject, which as it happens, does not coincide with that which Common Law courts apply in actions brought before them.7
In Anglo-American law, the party adducing challenged evidence bears the burden of establishing that the evidence satisfies all applicable rules regarding admissibility. In international practice, as in the civil law,8 the burden is shifted; evidence offered within time limits established by the tribunal will normally be admitted unless the individual challenging its acceptance can show specific grounds for nonadmissibility.9 Sandifer summarizes this underlying approach:
In the absence of the provision of a specific ground of exclusion in the arbitral agreement, there is no rule of law that can be invoked as
5Ibid. 6 Ibid. ' H. Lauterpacht, The So-called Anglo-American and Continental Schools of Thought in International Law, 12 BRIT. Y.B. INT'L L. 31, 41 (1931). 8 See Damaska, Evidentiary Barriers to Conviction and Two Models of Criminal Procedure: A Com- parative Study, 121 U. PA. L. REV. 506 (1973) ("It is said that while common law systems are mainly concerned with the issue of admissibility, civil law systems admit all evidence that is logically relevant." Id. at 513). 9 Sandifer writes:
The International Court of Justice has construed the absence of restrictive rules in its Statute to mean that a party may generally produce any evidence as a matter of right, so long as it is produced within the time limits fixed by the Court. Evidence submitted after those time limits may only be admitted with the consent of the other party and subject to the sanction of the Court. In practice, while the Court has placed few restrictions upon the rights of the parties to produce whatever evidence they see fit, it has upon occasion exercised its discretionary authority to refuse to accept evidence offered.
D. SANDIFER, supra note 4, at 184-85 (footnotes omitted). Rosenne writes:
The practical inability to deduce from the preceding survey of the practice of the Court- whether its administrative decisions or its judicial work-clear guidance on the material admissibility of evidence (beyond the general test of relevance) is to no small extent due to the nature of international litigation and the manner in which it is conducted. The truth is that material admissibility is rarely disputed, least of all on formal grounds, and the parties concentrate on attacking the weight of evidence brought by the other side.
2 S. ROSENNE, THE LAW AND PRACTICE OF THE INTERNATIONAL COURT 584 (1965).
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binding a tribunal to exclude particular evidence. In practice . . . tri- bunals have been unwilling to exclude evidence in reliance upon general rules or principles, drawn from the practice of other tribunals or from municipal law. Admission is a matter of right, and the burden is upon the party challenging any piece of evidence to show that the particular procedural law of the tribunal will be violated by a refusal to ex- clude it.'"
Commentators agree that, in the words of one observer, "[e]vidence is seldom excluded by the [International] Court [of Justice]."'"1 The Swiss Me- morial in the Interhandel case12 averred that the liberal standard of admissibility established by the Court meant that "[l]es parties sont . . . dans une large mesure libres de presenter les preuves qu'elles estiment necessaires et oppor- tunes." 13 That is the traditional practice in international arbitration.14 Umpire Gutierrez-Otero, in his opinion in the Franqui case'5 before the Spanish-Vene- zuelan Mixed Claims Commission of 1903, quoted Merignhac'6 to the effect that "le tribunal arbitral demeurera libre d'employer, pour s'eclairer, tous les genres de preuves qu'il croira necessaires; et il ne sera lie, a cet egard, par aucune des restrictions qu'on rencontre dans les lois positives, specialement quant ai l'administration de la preuve testimoniale."'7 One explanation of the practice of liberal admission before international tribunals is that the nature of the cases presented and of the tribunals them- selves demands an especially broad tolerance. After all, tribunals in interna- tional law have traditionally been viewed as creatures of the consent of the litigants with only those powers the litigants have accorded them. Perhaps judges have been hesitant to exclude evidence in view of the very difficulty often attending its acquisition. Others have theorized that the rules of ad- missibility are an integral part of the trial-by-jury system in Anglo-American procedure.'8 According to this rationale, it is appropriate for "the [interna-
10 D. SANDIFER, supra note 4, at 189-90. " Alford, Fact Finding by the World Court, 4 VILL. L. REV. 37, 81 (1958). Cf. M. HUDSON, THE PERMANENT COURT OF INTERNATIONAL JUSTICE ?520, at 571 (1943) ("The occasions have been rare in which the [Permanent] Court [of International Justice] has excluded evidence prof- fered, and no general rules for exclusion have been formulated"). 12 Interhandel Case (Switz. v. U.S.), 1959 ICJ REP. 6 (Judgment of March 21). 13 Memoire du Gouvernement de la Confederation Suisse, 1959 ICJ Pleadings (Interhandel) 79, 128 (Memorial dated March 3, 1958). 14J. RALSTON, THE LAW AND PROCEDURE OF INTERNATIONAL TRIBUNALS ??379-83 (1926); J. SIMPSON & H. Fox, INTERNATIONAL ARBITRATION 192-93 (1959).
International tribunals usually allow the parties the greatest freedom in presenting evidence. In international law there are no general rules requiring the exclusion of categories of evidence. While it is open to the parties to agree upon rules of exclusion, the tendency has always been to give tribunals the widest discretion in the admission and assessment of evi- dence.
Id. at 192. 15 Franqui Case (Spain v. Venez.), 10 R. Int'l Arb. Awards 751 (1903). 16 A. MERIGNHAC, TRAITE THEORIQUE ET PRATIQUE DE L'ARBITRAGE INTERNATIONAL ?272, at 269-70 (1895). 7 10 R. Int'l Arb. Awards at 751. 1 The assumption that restrictive rules of admissibility are an exclusively Anglo-American phenomenon, evolving in the law of evidence of common law countries only because of the
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tional] tribunal to admit evidence that might normally be rejected in municipal litigation" because "the members of the tribunal, being jurists trained in the sifting of evidence, are [unlike jurors] competent to appreciate the evidence according to its intrinsic and relative value."'19 But it would be wrong to say that there are no restrictions on admissibility of evidence. Although barriers to the admission of evidence have been rela- tively insignificant, they have not been entirely lacking. Commentators have pointed to considerations of internal procedural fairness and the orderly,ad- ministration of judicial machinery ("good judicial order") as the most impor- tant policy limitation on the liberal evidentiary standard. Thus, evidence pur- posely withheld for late submission, with the intent of gaining an unfair ad- vantage, has on occasion been rejected by international jurists. Different conceptions of what constitutes bad faith, however, have protected some such tardy submissions from rejection. In the Island of Palmas arbitration,20 for example, Judge Huber found that the Netherlands had committed no impro- priety in withholding documents mentioned in its memorandum until they were called for by the arbitrator in his discretion.2' Where arbitral agreements have limited the nature of the evidence to be considered, some tribunals have refused admission of other evidence, on the rationale that were exceptions made, opposing parties might ignore the de- cision of the tribunal on grounds of exces de pouvoir.22 Article V of the arbitral agreement concerning the Masica Incident,23 for example, specified that "nei- ther government shall be entitled to put in any further evidence as to the events which occurred on the 16th June, 1910, beyond that which was given before, or taken into consideration by, the above-mentioned court of enquiry at La Ceiba."24 On other occasions, tribunals have shown some reluctance to admit evidence not submitted within time limits fixed by them. At least twice,
institution of the jury, is widely shared among scholars. McCormick has written: "It is safe to say that without the jury there would be no law of evidence remotely resembling the rules of ad- missibility which make up its contents in English-speaking countries today." Evidence, in 5 EN- CYCLOPEDIA OF THE SOCIAL SCIENCES 639 (1931). Wigmore is to the same effect:
But chiefly it owes its origin, maintenance, and system to the separation of function between judge and jury. If this separation of judge and jury had not existed as it has, with all its history, nothing marked would probably have developed. Under the Continental systems, in which the jury is but a modern borrowing, little of the sort appears.
I J. WIGMORE, EVIDENCE ?28, at 409 (1940). Sandifer writes: "The radical difference in Anglo- American and in civil law rules relating to admissibility of evidence is generally attributed to the presence of the jury in thejudicial system of the former and its absence in the latter." D. SANDIFER, supra note 4, at 177. 19 D. SANDIFER, supra note 4, at 182. 20 Island of Palmas Case (Neth. v. U.S.), 2 R. Int'l Arb. Awards 831 (Perm. Ct. Arb. 1928). 21 Id. at 840-42. See D. SANDIFER, supra note 4, at 60-69. 22 On nullity in general, see A. BALASKO, CAUSES DE NULLITE DE LA SENTENCE ARBITRALE EN DROIT INTERNATIONAL PUBLIC (1938); W. M. REISMAN, supra note 3; J. WITENBERG, L'ORGANISATIONJUDICIARE, LA PROCEDURE ET LA SENTENCE INTERNATIONALES (1937). 23 Arrangement between the United Kingdom and Honduras Referring to Arbitration Matters relating to the Masica Incident, 10 AJIL, Supp. 98 (1916). 24Id. at 100.
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for example, the Central American Court of Justice proved sympathetic to challenges to the admissibility of documents not submitted with the complaint, although in neither case did the Court find that it was necessary specifically to exclude the tardily proffered evidence.25 Similarly, in the Saint-Naoum case,26 the Permanent Court of InternationalJustice refused to hear testimony offered by the Serb-Croat-Slovene representative after the close of proceed- ings, despite the earlier unavailability of the witness concerned.27 On at least one occasion, the Permanent Court of International Justice rejected documentary evidence because it was not filed in proper form. In the Free Zones case,28 Switzerland offered documents that, although bearing indirectly on the case, were not annexed to any written proceedings and were therefore not formally presented either to the judges or to the opposing party, France. When the Swiss agent referred to the documents during oral argu- ment, France objected and the Court, invoking Article 52 of its Statute,29 refused to admit the evidence.30 Under similar circumstances, in the Mavrom- matis Jerusalem Concessions case,31 the Court hesitated to receive into evidence specific documents that had not been annexed, and admitted the evidence only "by a special decision . . . under Article 33 of the Rules."32 Other policies have also animated decisions by international tribunals to exclude apparently relevant evidence. Several decisions of the Permanent Court of International Justice manifest a concern for maintaining the viability of efforts at extrajudicial settlement by insisting on the preservation of the
25 Honduras and Nicaragua v. Guatemala and El Salvador, THE CLAIM INSTITUTED BEFORE THE COURT OFJUSTICE OF CENTRAL AMERICA BY THE GOVERNMENT OF HONDURAS AGAINST THE GOVERNMENT OF GUATEMALA 90-143 (1908); Felipe Molina Larios v. Honduras, 3 ANALES DE LA CORTE DEJUSTICIA CENTROAMERICANA 58, 60-61 (1913). See D. SANDIFER, supra note 4, at 185-86. 26 Question of the Monastery of Saint-Naoum (Albanian Frontier), 1924 PCIJ, ser. B, No. 9. 27 1924 PCIJ, ser. C, No. 5-II, at 381-82; 1926-27 PCIJ, ser. E, No. 3, at 214. 28 Case of Free Zones of Upper Savoy and the District of Gex, 1932 PCIJ, ser. A/B, No. 46. 29 Article 52 of the Statute of the Permanent Court of International Justice read: "After the Court has received the proofs and evidence within the time specified for the purpose, it may refuse to accept any further oral or written evidence that one party may desire to present unless the other side consents." Article 52 of the Statute of the International Court ofJustice is identical to that of the Permanent Court. 30 1929 PCIJ, ser. A, No. 22, at 14, 21. 3' The Mavrommatis Jerusalem Concessions, 1925 PCIJ, ser. A, No. 5. 32 1929-30 PCIJ, ser. E, No. 6, at 290. Article 33 of the 1926 Rules of the Permanent Court of International Justice read:
The Court shall fix time limits in each case by assigning a definite date for the completion of the various acts of procedure, having regard as far as possible to any agreement between the parties.
The Court may extend time limits which it has fixed. It may likewise decide in certain circumstances that any proceeding taken after the expiration of a time limit shall be consid- ered as valid.
If the Court is not sitting, the powers conferred upon it by this article shall be exercised by the President, subject to any subsequent decision of the Court.
Rules of Court, adopted on July 31, 1926, PCIJ, ser. D, No. 1, at 33, 46-47.
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confidentiality of earlier efforts at settlement.33 In the Chorz6w case,34 the Court refused to consider declarations, admissions, or proposals made by the parties in the course of prior, abortive direct negotiations.35 During proceed- ings in the Danube Commission case,36 the Court declined admission of the history of certain articles of the Versailles Treaty, since these were "confi- dential" and had not "been placed before the Court by, or with the consent of, the competent authority."37 By special order in the Oder Commission case,38 the Court ruled inadmissible, as travaux preparatoires, the minutes of the Com- mission on Ports, Waterways and Railways of the Paris Peace Conference.39 And when, in the Meuse case,40 the Netherlands objected to Belgium's offer into evidence of a treaty draft that the two parties had considered during abortive negotiations, the Court declined to make the document a part of the record.4" Beyond these scattered examples, international tribunals have displayed little interest in excluding evidence. Documentary, testimonial, and real evi- dence has frequently been accepted for consideration even when irregularly presented. Despite the intermittent storms over this matter in domestic law, strong opposition to the near lack of international evidentiary barriers has never really developed. The general consensus of practitioners and commen- tators alike is that stricter rules of admissibility are wholly inappropriate for international arbitration or adjudication.42 In his opinion in the Mdximo Mora
s This consideration is an important one on the domestic level as well. Rule 408 of the Federal Rules of Evidence provides:
Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compro- mise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. This rule does not require the exclusion of any evidence otherwise discoverable merely because it is presented in the course of com- promise negotiations. This rule also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution.
According to the Advisory Committee's Note to Rule 408, "exclusion may be based on two grounds. (1) The evidence is irrelevant.. . . (2) A more consistently impressive ground is pro- motion of the public policy favoring the compromise and settlement of disputes." See MCCORMICK'S HANDBOOK OF THE LAW OF EVIDENCE ?274 (2d ed. E. Cleary 1972). " Case Concerning the Factory at Chorzow (Claim for Indemnity) (Jurisdiction), 1927 PCIJ, ser. A, No. 9. 35 Id. at 19. "6Jurisdiction of the European Comm'n of the Danube between Galatz and Braila, 1927 PCUJ, ser. B, No. 14. 37 Id. at 32. 38 Case Relating to the Territorial Jurisdiction of the Int'l Comm'n of the River Oder, 1929 PCIJ, ser. A, No. 23. 39 Id. at 42. 40 The Diversion of Water from the River Meuse, 1937 PCIJ, ser. A/B, No. 70. 41 1937 PCIJ, ser. C, No. 81, at 220, 224. 42 See, e.g., Alford, supra note 11, at 81:
An exclusion of evidence by the [International] Court [of Justice] based upon the way in which it was secured would be unrealistic in view of the known barriers established by States
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case43 before the United States-Spanish Mixed Claims Commission of 1871, the Spanish arbitrator expressed a common attitude:
It may be that under the strict English-American rules of evidence which prevail in trials where a court decides questions of law and a jury decides questions of fact, and the judge prescribes what witnesses can testify, and what description of evidence can be permitted to go to the jury, these newspaper clippings might not be admitted. But this commission is not bound by such English-American rules of evidence in jury trials. The arbitrators hear and decide questions of law and fact alike. The arbitra- tors are competent to decide for themselves as to the amount of credi- bility to be given to any evidence, and are not in danger of being misled, as juries may be. This objection to the reception of newspapers to prove facts of general and public notoriety seems, so far as I can see, to grow out of a very technical, artificial, and varying rule in English and Amer- ican tribunals, which excludes all evidence which can be labeled as. *hearsay."
More recently, Rosenne has asserted, with regard to documentary evidence submitted to the International Court, that "the restrictions upon admissibility of evidence sometimes encountered in municipal procedure (and connected with the system ofjury trial) have no place in international adjudication, where the relevance of facts and the value of evidence tending to establish facts are left to the entire appreciation of the Court."45 The scholarly discussion is plainly not satisfactory. The resistance of inter- national commentators and decision makers to more formidable evidentiary barriers stems from a constricted conception of the purpose of rules limiting the admissibility of evidence. As our review has shown, most arbitral and doctrinal discussions have characterized the problemn of admissibility solely in terms of the differential skills of legal specialists and laymen in a courtroom. Strict rules of admissibility are typically viewed as having no rationale what- soever in the absence of the jury trial. Since the institution of the jury is not part of international judicial practice, doctrinalists found no reason for strong restrictions upon the acceptance of evidence in that context. Whatever limi- tations were accepted were attributed to an overriding concern with internal procedural fairness and the orderly administration ofjudicial machinery. The concern for "good judicial order" obviously must figure prominently among the policies stimulating the exclusion of evidence. But it is neither the only nor the most important evidentiary policy. International tribunals and judicial scholars err seriously when, relying purely on historical argument and rigidly textual interpretation, they ignore
to the flow of information. The Court is not faced with the problem of intermittent police abuses of individuals which national constitutional guarantees are designed to minimize. The Court must get its evidence when and by whatever means it can obtain it. 13 Case concerning Antonio M'aximo Mora (Spain v. United States), 16 RECORD, OPINIONS AND DECISIONS, UNITED STATES-SPANISH MIXED CLAIMS COMMISSION, Decision No. 48 (1871). 44 Count Lewenhaupt, Umpire, Case of Antonio Maximo Mora, quoted in D. SANDIFER, supra note 4, at 182-83. 45 2 S. ROSENNE, supra note 9, at 557.
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other significant policy implications involved in rules limiting admissibility. One such implication is the constitutional or rule of law dimension in which courts are supposed to function, inter alia, as a buffer between the other institutions of government and the other participants in the social process. While the structural features of the domestic decision process itself and, in particular, the presence or absence of the jury will unquestionably have some effect on rules of evidence, many of the restrictive principles of admissibility now derive from complex relationships between different branches of gov- ernment. Restrictive admissibility is often an attempt to limit the power of the prosecutor and to protect the community from overly zealous invasions of privacy in the interests of gaining evidence for judicial purposes.46 Mutatis mutandis, the same problems may apply on the international level. Indeed, international tribunals have not been entirely oblivious to this dimension. On two occasions, at least, the admissibility of relevant evidence has been ques- tioned because it was secured in a manner that the court deemed harmful to public order and that it did not wish to encourage.47
II.
The question of the admissibility of evidence obtained by unlawful inter- vention was raised, in rather sharp fashion, in the merits phase of the Corfu Channel case48 in 1949. British ships transiting the Straits of Corfu in a claimed right of innocent passage struck mines whose presence had not been made known by the Albanian Government. Thereafter, British minesweepers swept the Channel without securing Albanian permission. Later, in the International Court, the United Kingdom sought to use the mines that had been collected in the sweeping operation as evidence of Albanian responsibility. The Court paid close attention to the question of the lawfulness of the November 1946 sweeping operation. "Operation Retail," as it was called by both the parties and the Court, had been preceded by a request from the United Kingdom to the Albanian Government for permission to sweep Corfu Channel. The Albanian Government had replied on October 31, 1946 that it did not consent to any sweeping within Albanian territorial waters, i.e., in the Straits of Corfu. In the meanwhile, the United Kingdom had requested the permission of the International Central Mines Clearance Board for a sweeping of the Channel; the board indicated its judgment of its own lack of competence by approving the British request subject to Albanian consent.
46 Such was the basic rationale for the United States Supreme Court's decision in Mapp v. Ohio, 367 U.S. 643 (1961), which held that the Fourteenth Amendment fully incorporated the Fourth Amendment's guarantee against unreasonable searches and seizures, on the ground that "the only effectively available way" that one could compel respect for the "constitutional guaranty" of the Fourth Amendment was to exclude from both state and federal criminal prosecutions all evidence obtained in violation of the Constitution. 367 U.S. at 656 (quoting Elkins v. United States, 364 U.S. 206, 217 (1960)). Stressing the importance of "the imperative of judicial integrity," the Supreme Court noted that "[n]othing can destroy a government more quickly than its failure to observe its own laws." 367 U.S. at 659. 47 See notes 49-69 and accompanying text, infra. 48 Corfu Channel Case (UK v. Alb.), 1949 ICJ REP. 4 (Judgment of April 9).
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When Britain then informed Albania of its intention to conduct the sweep, Albania replied that a sweep within its territorial waters, where it claimed "foreign warships [had] no reason to sail,"49 would be considered a deliberate violation of Albanian territory and sovereignty. Despite the protest, Operation Retail was carried out on November 12 and 13. The British invited an officer of the French Navy to attend as observer. There seems to be no evidence that the sweep was conducted with any purpose other than its manifest objective, nor any dispute about the absence of formal authority for it. As the Court observed:
The United Kingdom Government does not dispute that "Operation Retail" was carried out against the clearly expressed wish of the Albanian Government. It recognizes that the operation had not the consent of the international mine clearance organizations, that it could not be justified as the exercise of a right of innocent passage, and lastly that, in principle, international law does not allow a State to assemble a large number of warships in the territorial waters of another State and to carry out mine- sweeping in those waters. The United Kingdom Government states that the operation was one of extreme urgency, and that it considered itself entitled to carry it out without anybody's consent.50
The United Kingdom justified its action on two grounds. One related to an agreement among the United Kingdom, France, the Soviet Union, and the United States, allocating competence for mine clearance. The Court dismissed it summarily. The second justification related to the gathering of evidence. As the Court phrased it, the main defense of the United Kingdom was that "the corpora delicti must be secured as quickly as possible, for fear they should be taken away, without leaving traces, by the authors of the minelaying or by the Albanian authorities."'" The justification for this defense rested on "a new and special application of the theory of intervention, by means of which the State intervening would secure possession of evidence in the territory of another State, in order to submit it to an international tribunal and thus facilitate its task."52 The United Kingdom also justified Operation Retail as a method of self-protection and self-help.53
49 Id. at 33. 50 Id. at 33-34. 51 Id. at 34. 52 Ibid. 53 In oral argument, Sir Eric Beckett, representing the United Kingdom, characterized his nation's intervention theory as follows:
[W]e say that the United Kingdom had the right to sweep for the purposes of investigating the cause of the explosions under Saumarez and Volage in October, because (i) the United Kingdom did suspect, and had good reason to suspect, that a most serious international offence had been committed against ships of the Royal navy; (ii) the United Kingdom wished to bring a claim before the Security Council, if evidence was found to justify its suspicions; (iii) the United Kingdom feared, and had good reason to fear, that if very speedy action was not taken that evidence would be made to disappear by the party guilty of this offence.
Reply by Sir Eric Beckett, ICJ Pleadings (4 Corfu Channel) 542, 572 (Reply dated Jan. 18-19, 1949). The legality of such intervention as its minesweeping operation represented, asserted the United Kingdom, was well recognized in international law:
(a) There is recognized in international law the right of a state, when a state of affairs involving a serious and flagrant breach of the law has been brought about by another State
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The International Court rejected both of these claims. It felt that the as- sertion of a right of intervention for these purposes would be abused by relatively stronger states and ruled that the principle of self-help would not apply even after "the Albanian Government's complete failure to carry out its duties after the explosions, and the dilatory nature of its diplomatic notes."54 Nonetheless, the Court viewed those circumstances as extenuating to the point of virtually obliterating Britain's adjudged counter-delict. It de- clared "that the action of the British Navy constituted a violation of Albanian sovereignty,"55 but the Court refused to apply any serious sanction against the United Kingdom. It decided unanimously that its declaration of the un- lawfulness of the United Kingdom's act "is in itself appropriate satisfaction."56 More important, it admitted evidence concerning the mines that had been unlawfully swept by the United Kingdom. The phenomenon of a judgment that affirms a norm, while allowing the illegal fruits of its violation to be enjoyed by the violator, is not unusual. Courts doing this seem to wish to vindicate the norm, while establishing, by special jurisprudence, that some violations will be tolerated. In terms of strictest
or has been permitted to come about, to intervene by direct action. The purpose of such intervention may be to prevent the continuance of the situation which is in breach of the law, or, where the intervening State has suffered an injury of a nature capable of being redressed, to further the administration of international justice by preventing the removal of the evidence.
(b) In this case it was plain from the nature of the incident of 22nd October that a serious breach of international law had been committed by some State whether Albania or another. Not only had a dangerous obstruction been placed right across an international highway of navigation, thus constituting a threat to the shipping of all nations, but this obstruction took the form of a minefield the laying of which was a manifest breach of the Hague Convention VIII of 1907. Either of these grounds was in itself sufficient to justify intervention by the United Kingdom, the State which had suffered from it.
Reply of the United Kingdom, id. (2 Corfu Channel) 241, 282, para. 82 (Reply dated July 30, 1948). The United Kingdom acknowledged that any right of intervention must be "exercised in a reasonable manner so as to cause the minimum interference with the sovereignty of the State concerned." Id. at 284, para. 82(f). It argued that this requirement had been fulfilled in Operation Retail because "the Government of the United Kingdom in fact took the utmost precautions to ensure that all aggressive and provocative acts were avoided and that Albanian sovereign rights were not infringed." Id. at 286, para. 84. In response to the claims of the United Kingdom, Albania asserted that a right of intervention, if it existed any longer in international law, was a collective right of international organizations and not individual states. Reply of Albania, id. at 313, 372, para. 151 (Reply dated Sept. 20, 1948). According to Albania,' the fact that British ships were victims of mine explosions did not excuse the sweeping operation. And even if Great Britain had possessed a right of intervention, the Albanians declared, the abusive manner in which the minesweeping operation was exercised would itself constitute an infringement upon the sovereignty of Albania. Id. at 372, para. 150. The Albanian representative warned that support by the International Court for the act of the United Kingdom would create a serious threat to world order: "Le Gouvernement albanais * . .ajoute qu'il serait fort dangereux pour la Cour de sanctionner par son autorite des pratiques qui ne correspondent pas a l'etat actuel des relations internationales et sont la negation meme de lajustice internationale." Id. at 371, para. 147. 54 1949 ICJ REP. at 35. 55 Ibid. 56 Ibid.
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construction, mines illegally swept in another's territorial waters are admissible to prove sole responsibility for their explosion and injury to others. For prec- edential purposes one may say that unlawfully gathered evidence may at least on the facts of the Corfu Channel case be deemed admissible.57 More broadly construed, the only practical interpretation of this aspect of the Corfu Channel judgment would seem to be that certain unlawful collections of evidence will be declared violations of international law, yet no sanction will be imposed on the gatherer, nor will the illegally gained evidence be deemed inadmissible. It is noteworthy that the result achieved did not require these fine distinc- tions. The Court might have admitted the mines but substantially penalized the United Kingdom. -Alternatively, it might have denied admissibility but imposed an onerous praesumptio juris, effectively requiring Albania to dem- onstrate either that it could not have known of the mines or that it had used all due diligence in seeking to clear the Corfu Channel. Either technique would have affirmed the normative principle prohibiting the unlawful gath- ering of evidence, while still confirming Albanian liability. We will speculate below on the reasons why the Court rejected these alternatives and the longer range political consequences of the way it formulated its decision.
III.
The issue of admissibility presents itself as a subtle factor in a different context in the Iranian Hostages case58 of 1980. The Iranian Government, despite the compelling jurisdictional case submitted by the United States, chose not to appear in court, and availing itself instead of an interesting practice long countenanced by the Permanent Court and the International Court,59 presented its arguments by letter delivered through diplomatic chan- nels. A basic Iranian point, not always stated with optimum coherence, was that the invasion of the Embassy, the sequestration of the documentary ma- terial there, and the incarceration of the U.S. diplomats had to be put in context. As the Iranian letter explained:
[I]t cannot be studied separately . . . [for it] involves, inter alia, more than 25 years of continual interference by the United States in the in-
57 But see Shah, Discovery by Intervention: The Right of a State to Seize Evidence Located Within the Territory of the Respondent State, 53 AJIL 595, 612 (1959):
Certain eminent writers are of the view that, despite what they term the somewhat general language used by the [Corfu Channel] Court, the observations of the Court could be confined merely to rejecting the right of self-help for the purpose of discovery of evidence, and self- help might still be regarded as legal in some circumstances. It is submitted that the learned authors, in their anxiety to retain the right of sqlf-help for states till such time as the systems of pacific settlement of international disputes and of collective security established by the Charter can be rendered effective, read into the declaration of the Court an interpretation that it cannot bear. . . . [D]iscovery of evidence by intervention is not a method that is admissible in international law [footnote omitted].
58 Case concerning United States Diplomatic and Consular Staff in Tehran (U.S. v. Iran), 1980 ICJ REP. 1 (udgment of May 24). 59See, e.g., Status of Eastern Carelia (Advisory Opinion), 1923 PCIJ, ser. B, No. 5; Nuclear Tests Cases (Austl. v. Fr.), 1973 ICJ REP. 99 (Order of June 22), 1974 ICJ REP. 253 (udgment of Dec. 20); Fisheries Jurisdiction Case (UK v. Ice.), 1974 ICJ REP. 3 (udgment of July 25).
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ternal affairs of Iran, the shameless exploitation of our country, and numerous crimes perpetrated against the Iranian people, contrary to and in conflict with all international and humanitarian norms.60
The Iranian claim might be reformulated as follows: The United States is alleged to have intervened in Iranian affairs for a quarter of a century and to have unlawfully influenced Iranian politics during that period. Evidence that would permit the Iranian Government to prove its allegation-excluding that which is in the United States and, of course, is classified and securely kept and is for all intents and purposes nonexistent for influencing international judicial proceedings-is available in the United States Embassy in Tehran and in other consular facilities throughout Iran.6" If the principle of inviolability of diplomatic premises is taken as an absolute, the United States would be permitted to remove this information or to destroy it in place. Then the Iranian Government would never be able to prove its case, for it is most improbable, if not inconceivable, that the United States would voluntarily release such information or otherwise make it available to an international judicial process. The only way that the Iranian Government could establish its claim would be by a type of international discovery through self-help: precipitous entry into the U.S. facilities, sequestration of the documents there, their examination and filtering, and then their submission in an international process. In these terms, the constructive Iranian argument can be seen as akin to the British argument in the Corfu Channel case and as one more manifestation of what we have characterized as the plaintiffs dilemma. If evidence cannot be gathered immediately, though unlawfully, the entire suit will be frustrated. In contrast to its treatment in the Corfu Channel case, the Court did not explicitly consider the evidentiary dimension of the constructive Iranian claim.62 In part, this may be because the Iranian Government did not make
60 1980 ICJ REP. at 8. 61 No tonvincing evidence of illegal United States intervention in Iranian affairs seems to have been discovered in the American Embassy in Tehran. Barry Rubin explains the disparity between the expectations of the student militants who seized the Embassy and the reality of their findings in the following terms:
None of [the leaders of the students who occupied the Embassy] had much experience with international politics or with the workings of embassies. This, coupled with their ide- ology, made their analyses of the United States Embassy's operations inaccurate in the ex- treme. For them, a State Department report on the Kurdish insurrection or on the anti- Khomeini Islamic terrorist group Forqan was proof that the United States was in contact with these movements, if not directing them. Any meeting between an Iranian official and embassy employees was proof of the former's treason and the latter's espionage. What was the most remarkable was their failure, after months in the embassy files, to produce any hard evidence of their accusations; some of the material circulated as evidence within Iran consisted of the most transparent forgeries. B. RUBIN, PAVED WITH GOOD INTENTIONS 326 (1980). 62 The Times of London found an inability independently to scrutinize the evidence to be one of the failings of the five-man United Nations Commission sent to Tehran in February of 1980. In an editorial entitled A Meaningless Tribunal, the Times criticized the Commission in part as follows: The United Nations has a fundamental responsibility to uphold and preserve international law. It also has the task of resolving international disputes by whatever peaceful means are
This content downloaded from 128.59.176.2 on Thu, 08 Dec 2016 19:36:41 UTC All use subject to http://about.jstor.org/terms 750 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 76 the claim clearly; in part, it may have been the, Court's exercise of its own discretion in determining the pertinent and determinative issues to which it should address its attention. Certainly, the continuing detention of the dip- lomats was then perceived as a grave and combustible threat to world public order that urgently required defusing. Whatever the particular reasons, the Court responded in general terms that the gravity of a seizure of an embassy and its personnel could not be considered "secondary" or "marginal," con- sidering the importance of the legal principles involved.63
In any case, even if the alleged criminal activities of the United States in Iran could be considered as having been established, the question would remain whether they could be regarded by the Court as consti- tuting a justification of Iran's conduct and thus a defence to the United States' claims in the present case. The Court, however, is unable to accept that they can be so regarded. This is because diplomatic law itself pro- vides the necessary means of defence against, and sanction for, illicit activities by members of diplomatic or consular missions.64
The remedies supplied by diplomatic law to which the Court referred were (1) the declaration by the receiving state of a member of a mission as persona non grata under Article 9 of the 1961 Convention65 and under Article 23 of
appropriate. The continued captivity of the hostages in Iran has now compelled the United Nations to jettison one of those principles in pursuance of the other. In giving its imprimatur to the five-man Commission investigating the alleged crimes of the former Shah of Iran, the United Nations is playing a dangerous game. It is saying, in effect, that it is prepared to accept, and submit to, one of the most serious and blatant acts of international illegality of the century in the hope of gaining the release of the American hostages, and, as a secondary objective, promoting the normalization of relations between Iran and the United States, especially desirable in the context of the Soviet invasion of Afghanistan.
The investigation will meet not even the most basic principles of natural justice. There will be no independent scrutiny of the evidence, no cross-examination of witnesses, no attempt to ensure that any denial or explanation or defence on the part of the former Shah is heard and taken into account. It will be an entirely one-sided affair, staged-managed by the Iranians to achieve a particular result.
The Times (London), Feb. 21, 1980, at 15. 63 1980 ICJ REP. at 38-43. 64 Id. at 38. See CASE CONCERNING UNITED STATES DIPLOMATIC AND CONSULAR STAFF IN TEHRAN (UNITED STATES V. IRAN), MEMORIAL OF THE GOVERNMENT OF THE UNITED STATES OF AMERICA, pt. V, at 73 (1980):
Various Iranian spokesmen have stated or implied that some of the members of the United States Embassy in Tehran may have been engaged in functions (specifically, information- gathering or intelligence work) that are not contemplated by Article 3 of the Vienna Con- vention on Diplomatic Relations and that such actions, and the use of Embassy premises for such purposes, justify Iran's failure to accord inviolability to United States diplomatic agents and premises under Articles 22 and 29-35 of the Vienna Convention on Diplomatic Relations. But even if-contrary to fact-the Government of Iran had proved to the Court that in one or more respects the United States or the members of its Embassy had violated one or more obligations under the Vienna Convention, there would be no ground for finding that such violations excuse Iran from the legal obligations . . . described in this Memorial.
65 1980 ICJ REP. at 38-40; Vienna Convention on Diplomatic Relations of 1961, 500 UNTS 95, 23 UST 3227, TIAS No. 7502.
This content downloaded from 128.59.176.2 on Thu, 08 Dec 2016 19:36:41 UTC All use subject to http://about.jstor.org/terms 1982] THE PLAINTIFF'S DILEMMA 751 the 1963 Convention,66 with the coordinate obligation of the declaring state to provide for the safe exit of the departing diplomat and, (2) in extremis, "the power which every receiving State has, at its own discretion, to break off diplomatic relations with a sending State and to call for the immediate closure of the offending mission."67 Even in this latter case, under Article 45 of the 1961 Convention,68 the diplomatic premises of the erstwhile sending state would still remain inviolable. In terms of the Corfu Channel outcome, all of these remedies fail to assure access to the evidence that the plaintiff has reason to suspect will be grounds for and will promise success in the judicial process. To be sure, the Court's holding cannot be considered dispositive of the plaintiff's dilemma. Only if Iran had released the hostages but retained the information seized when the militants penetrated the diplomatic premises, would the Court have been obliged to determine whether state responsibility was engaged, specifically for retaining the evidence, whether damages might be owing to the United States, and, most important, whether the evidence gained by this unlawful entry could be admitted in a possible suit before the International Court of Justice. Nevertheless, the Court's dispositive lends credence to the inference that the illegally gained evidence would have had to be returned unused, the plaintiff's dilemma notwithstanding. The Court decided unanimously that Iran "must immediately place in the hands of the protecting Power the premises, property, archives and documents of the United States Embassy in Tehran and of its Consulates in Iran."69 In these terms, the implication would appear to be that that evidence would not be admissible.
IV.
National decisions seem to have yielded, in certain cases, to the admissibility of evidence gained illegally from diplomatic premises. In the well-known Cana- dian case of Rose v. The King,70 the Canadian court permitted the admission of documents obviously taken from Soviet diplomatic premises in Ottawa against the wishes of the Soviet Government. That case, however, was com- plicated by the fact that the Canadian Government, though using the docu- ments as evidence, had not itself taken them. Moreover, it was the defendant, a Canadian national, who raised the issue of admissibility; the Soviet Union made no effort to claim the documents or to protest their use in the trial. Given the extraordinary circumstances in which the documents reached the court, Rose and a number of similar incidents would not appear to be the sorts of incremental erosions of the physical immunity of diplomatic premises that signaled the alarm of the International Court of Justice in the Iranian Hostages case. As regards electronic monitoring, however, state practice now appears to tolerate-perforce-much, if not widespread, listening to communications
66 1980 ICJ REP. at 38-40; Vienna Convention on Consular Relations of 1963, 596 UNTS 261, 21 UST 77, TIAS No. 6820. 67 1980 ICJ REP. at 40. 68 Vienna Convention on Diplomatic Relations, supra note 65. 69 1980 ICJ REP. at 44. 70 [1947] 3 D.L.R. 618.
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to, from, and within premises, inconsistent with the letter of the 1961 Vienna Convention.7'
V
The plaintiffs dilemma brings two inclusive interests into conflict. On the one hand, there is a desire to encourage the use of international adjudication for alleged violations of international law and, incident to this, a desire to permit a state to pursue its interests in the courtroom by gathering evidence that will lay the groundwork for a case. A contrary concern is that a state may be overzealous in gathering evidence. Retroactive validation of illegal seizures of evidence could encourage many more interventions into the territory and social processes of other states, many initially justified as good faith efforts to gather evidence. The result could then be more conflict and frustration of the fundamental purposes of international adjudication. Plainly, judges and scholars must begin to clarify policies regarding admissibility of evidence in international adjudications and arbitrations. In the Corfu Channel case, the International Court seems to have yielded to the former interest. That decision may, in retrospect, have been less than optimum. The Court need not have relied on the mines gained in Operation Retail to permit the United Kingdom to pursue its case for injury and demand for damages. As we observed, other devices, such as an absolute presumption of the responsibility of a state for unpublicized mines in its territorial waters or in straits through which in-ternational traffic transits, could have achieved the same objective. If the absolute presumption seems too rigid and strains other policies that are appropriate, the Court might have also established an onerous rebuttable praesumptio juris. A shifting of the burden of proof would then have required Albania to come forward with evidence indicating that it was not responsible for the location of the mines; inability to shift this burden of proof would have rendered Albania responsible for the injury. In this fashion, the Court could have reached the same conclusion without having
71 The practice of electronic and even more intrusive surveillance, inter alia, of diplomatic premises was defended by John Ehrlichman as authorized by 18 U.S.C. ?2511. Presidential Cam- paign Activities of 1972, Senate Resolution 60: Hearings before the Senate Select Comm. on Presidential Campaign Activities, 93d Cong., 1st Sess. 2543 (1973-74). In part because of this, 18 U.S.C. ?2511(3) was subsequently repealed. For a review of the alleged practice of government surveil- lance, see V. MARCHETTI & J. MARKS, THE CIA AND THE CULT OF INTELLIGENCE 204-05 (1974). The Foreign Intelligence Surveillance Act, 50 U.S.C. ?1801 (1978), would appear to contravene the letter of the Vienna Convention on Diplomatic Relations, but may well represent a distressingly wide spectrum of national practice. The United States, as a "rule of law" system in which legislative-bureaucratic controls have been extended increasingly to the foreign affairs sector, may be singular among electronically eavesdropping nations only in that it must establish explicit and publicly acknowledged legislative authority to do things many other states are able to do secretly or discreetly. Hence the United States is singled out for blame for engaging in what may well be operationally accepted conduct. See W. M. REISMAN, FOLDED LIES, ch. 1 (1979). Be that as it may, the United States and other states that engage in such conduct must conclude, and presumably have concluded, that the need for and value of intelligence gained by electronic surveillance outweighs the incremental erosion of the norm upholding the inviolability of diplo- matic premises and their communications.
This content downloaded from 128.59.176.2 on Thu, 08 Dec 2016 19:36:41 UTC All use subject to http://about.jstor.org/terms 1982] THE PLAINTIFF'S DILEMMA 753 had to approve, in effect, a United Kingdom intervention into Albanian ter- ritory. In the Iranian Hostages case, one would have expected the Court not to follow the Corfu precedent. The importance the Court ascribed to the inter- national diplomatic function, and to the immunity without which it cannot be effectively performed, required a blanket prohibition of the admissibility of any evidence gained unlawfully by a violation of diplomatic premises. This would certainly seem to be the better position. Indeed, if the diplomatic func- tion is as important as the Court and many other authoritative statements have held, then any encouragement of a violation of its immunity would appear certain to jeopardize what international order exists. At least for embassies, if not for many other areas, any illegally gained evidence should be deemed inadmissible. The plaintiffs dilemma should be resolved against the plaintiff.
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ARTICLES
OBTAINING AND SUBMITTING EVIDENCE IN INTERNATIONAL ARBITRATION IN THE UNITED STATES
Claudia T. Salomon and Sandra Friedrich*
I. INTRODUCTION
A. Evidence in International Arbitration
The procedures for obtaining and submitting evidence – and the weight it should be given – play an important role in international arbitration. National courts generally follow elaborate rules governing the taking of evidence and its introduction in court proceedings. Procedures for the disclosure of evidentiary materials also play an essential role in international arbitration, as fact-finding is one of the key functions of the arbitral tribunal.1 While many international arbitrations involve at least some measure of disclosure, views on availability and scope of disclosure vary widely among common law, civil law and other legal systems.2 In addition, assistance of a domestic court at the seat of the arbitration or at the location of the information sought may be available. The availability and breadth of disclosure that a tribunal may order as well as the assistance in evidence-gathering a national court may give are important considerations when considering an arbitral seat and when developing the strategy for presenting a case in international arbitration.3
* Claudia T. Salomon is Global Co-Chair of Latham & Watkins’ International Arbitration Practice Group and a partner in New York. Sandra Friedrich is an associate in Latham & Watkins’ International Arbitration Group in New York. The authors would like to thank Anne Loehner and Samuel B. de Villiers for their ideas, editing and research. 1 NIGEL BLACKABY ET AL., REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION § 6.83, at 385 (5th ed. 2009); GARY BORN, INTERNATIONAL COMMERCIAL ARBITRATION 1878, 1886 (2009). 2 Within common and civil law jurisdictions, significant differences regarding disclosure also exist. 3 Because there are significant differences between the disclosure processes in litigation and arbitration, some commentators suggest that the term “discovery” should not be used in connection with international arbitration, preferring “disclosure” or “evidence taking” instead. See, e.g., BLACKABY ET AL., supra note 1 at 393, n.65 (stating that the term “discovery” describes a process in common law countries, whereby the parties are legally obliged to produce documents that are relevant, even if prejudicial to their case, and thus “has no place in international arbitration”); JULIAN D. M. LEW, LOUKAS MISTELIS, & STEFAN KRÖLL, Taking Evidence in International Arbitration, in COMPARATIVE INTERNATIONAL COMMERCIAL ARBITRATION Ch. 22, ¶ 51, at 567 (2003); Robert von Mehren, Rules of Arbitral Bodies Considered from a Practical Point of View, 9(3) J. INT’L ARB. 105, 110 (1992); Robert Smit, Towards Greater Efficiency in Document Production 549 550 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24
B. Differences in Scope and Availability of Disclosure in Civil and Common Law
The legal training, traditions and experience of the arbitrators will inevitably influence a tribunal’s approach to disclosure.4 Similarly, the legal backgrounds of the parties – and their counsel – will impact the parties’ approach to disclosure. Courts in most civil law jurisdictions following inquisitorial traditions largely control the evidence-taking process and do not allow for (party-initiated) disclosure.5 Generally, parties rely on the documents in their possession and may not compel the production of relevant materials from each other or third-party witnesses.6 Civil law judges actively investigate the facts of the case, while counsel for the parties play a secondary role during hearings. For instance, civil law judges appoint experts and primarily question witnesses.7 However, courts rarely order a party to produce additional materials it had not previously and voluntarily submitted into evidence. Conversely, in most common law jurisdictions, a broad, party-initiated disclosure process is a central feature of dispute resolution, which is adversarial in nature.8 The collection and presentation of evidence is mainly in the hands of the before Arbitral Tribunals – A North American Viewpoint, in DOCUMENT PRODUCTION IN INTERNATIONAL ARBITRATION 93 (Emmanuel Jolivet ed., ICC Ct. Bull. Spec. Supp. 2006) (“‘Discovery,’ in the U.S. sense, is a dirty word in international arbitration”); Dominque d’Allaire & Rolf Trittmann, Disclosure Requests in International Commercial Arbitration: Finding a Balance not only between Legal Traditions but also between the Parties’ Rights, 22 AM. REV. INT’L ARB. 119, 120-21 (2011); but see James Gardiner, Lea Haber Kuck & Julie Bédard, Discovery, in INTERNATIONAL COMMERCIAL ARBITRATION IN NEW YORK 269, 269 n.1 (James Carter & John Fellas eds., 2010) (noting that the term “discovery” is commonly used in connection with U.S. arbitrations, making it appropriate for international arbitrations seated in the U.S. as well). Because the term “disclosure” more readily connotes the prohibition against U.S.-style “fishing expeditions,” it is often preferred by practitioners and will be used in this article. 4 BORN, supra note 1, at 1893; Gardiner et al., supra note 3, at 279. 5 See, e.g., BORN, supra note 1, at 1893-94; Claude Reymond, Civil Law and Common Law: Which Is the Most Inquisitorial? A Civil Lawyer’s Response, 5 ARB. INT’L 357, 360 (1989); Paolo Michele Patocchi & Ian L. Meakin, Procedure and Taking of Evidence in International Commercial Arbitration: The Interaction of Civil Law and Common Law Procedures, 7 INT’L BUS. L.J. 884, 886-87 (1996); Geoffrey C. Hazard, Jr., Discovery and the Role of the Judge in Civil Law Jurisdictions, 73 NOTRE DAME L. REV. 1017, 1019-22 (1998). 6 See, e.g., BORN, supra note 1, at 1893-94; LEW ET AL., supra note 3, at Ch. 22, ¶ 51, at 567; Mauro Rubino-Sammartano, Rules of Evidence in International Arbitration: A Need for Discipline and Harmonization, 3(2) J. INT’L ARB. 87, 88-89 (1986); Christian Borris, Common Law and Civil Law: Fundamental Differences and their Impact on Arbitration, 2 ARB. & DISPUTE RES. L.J. 92, 98 (1995); Reymond, supra note 5, at 60 (“We react to the notion of discovery, be it English or, worse, American style, as an invasion of privacy by the court, which is only acceptable in criminal cases, where the public interest is involved.”). 7 BLACKABY ET AL., supra note 1, § 6.85, at 385. 8 BORN, supra note 1, at 1894. 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 551 parties, while common law judges serve as impartial “referees” in the taking and production of evidence. Unlike their civil law counterparts, common law judges have virtually no independent capacity to obtain additional evidence.9 In addition, common law systems tend to rely more heavily on oral testimony, thus providing for detailed procedures on the examination of witnesses, while civil law systems tend to give more weight to documents.10 Although an arbitral tribunal composed entirely of civil lawyers may be somewhat less likely than a tribunal composed of common lawyers to permit a substantial measure of disclosure, tribunals generally seek to make procedural decisions that are “international” rather than to replicate their local rules.11 The availability and scope of disclosure will depend on the specifics of each dispute.12 Overall, international arbitral tribunals tend to accord greater weight to contemporary documentary evidence than to oral witness testimony.13
C. Differences in Availability and Scope of Disclosure in Litigation and International Arbitration Proceedings in the United States
U.S. litigation is particularly known for its full-blown discovery, in which courts routinely grant the parties expansive disclosure requests.14 To ensure the truth is revealed, it is generally accepted that both parties should have full knowledge of every potentially relevant piece of information before presenting their case on the merits.15 The U.S. Federal Rules of Civil Procedure provide for a myriad of discovery mechanisms, including document disclosures, oral and written depositions, interrogatories and requests for admission.16 Under Rule 26, the permissible scope of discovery is extremely broad, allowing parties to “obtain
9 BLACKABY ET AL., supra note 1, § 6.84, at 385. For this reason, common law jurisdictions tend to have detailed procedural rules on disclosure and admissibility of evidence. Id. 10 Certainly, the distinctions between civil and common law systems should not be over-generalized. There are significant variations in the procedural rules of different common or civil law countries. 11 BORN, supra note 1 at 1895 (noting that [j]ustice is almost always best served by a degree of transparency”). 12 There may be instances where U.S. parties to an arbitration are disadvantaged by the disclosure process adopted in an arbitration proceeding. For instance, a civil law party may have access to the assistance of U.S. courts in taking evidence (e.g. assistance under 9 U.S.C. § 1782 where the arbitration is seated outside of the U.S.), while similar tools are not available to a U.S. party in the civil law country. Conversely, a civil law party may be disadvantaged by the disclosure process, for instance where the tribunal orders disclosure of certain documents that would not be “discoverable” under the party’s domestic law. See d’Allaire & Trittmann, supra note 3, at 119-20, 128. 13 BLACKABY ET AL., supra note 1, §§ 6.97-6.98, at 389. 14 Even among common law jurisdictions, U.S. discovery is unique in its breadth and significance to the proceedings. See Gardiner et al., supra note 3, at 279; Smit, supra note 3. 15 In U.S. litigation, oral examination and cross-examination of witnesses are viewed as key to uncovering the truth. 16 FED. R. CIV. P. 26 552 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24 discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense.”17 Rule 26 also provides that “relevant information” need not be admissible at trial, as long as “the discovery appears reasonably calculated to lead to the discovery of admissible evidence.”18 Similar rules can be found at the state level.19 Generally, parties may agree on the procedure of an international arbitration, including the disclosure process.20 The U.S. Supreme Court has recognized the principle of party autonomy in international arbitration.21 Thus, the parties may include detailed provisions on the availability, scope and timing of disclosure in their arbitration agreement. If the tribunal fails to follow the procedure agreed upon by the parties, the award may not be enforceable.22 However, arbitration
17 Id. at 26(b)(1) 18 Id. 19 See, e.g., New York Civil Practice Law and Rules (N.Y. C.P.L.R.), Art. 31; California Civil Discovery Act (1986), California Code of Civil Procedure, § 2017.010; see also generally Uniform Interstate Depositions and Discovery Act (2007) (model law establishing a uniform process for obtaining out-of-state depositions and discovery). 20 See BLACKABY ET AL., supra note 1, § 6.01, at 363, § 6.08, at 365; BORN, supra note 1 at 1879-80 (noting that issues of disclosure fall within the parties’ general procedural autonomy); see also Hall St. Assocs. v. Mattel, Inc., 552 U.S. 576, 586 (2008) (“[T]he FAA lets parties tailor some, even many, features of arbitration by contract, including . . . procedure”); Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 476 (1989) (“There is no federal policy favoring arbitration under a certain set of procedural rules; the federal policy is simply to ensure the enforceability, according to their terms, of private agreements to arbitrate”). This “guiding principle” of party autonomy is recognized by national arbitration laws, the New York Convention, the United Nations Commission on International Trade Law Model Law on International Commercial Arbitration (1985) (amended 2006) (“UNCITRAL MODEL LAW”) and various arbitral rules. BLACKABY ET AL., supra note 1, § 6.08, at 365; see also UNCITRAL MODEL LAW, Art. 19(1); RULES OF ARBITRATION OF THE INTERNATIONAL CHAMBER OF COMMERCE (2012) (“ICC RULES”), Art. 19(1); ARBITRATION RULES OF THE LONDON COURT OF ARBITRATION (“LCIA RULES”), Art. 14.1. However, the parties’ freedom to shape the arbitral process is not unlimited; mandatory rules and public policy requirements of the law at the seat of arbitration must be respected as well as general principles of procedural fairness. BLACKABY ET AL., supra note 1, at 1886; see also UNCITRAL MODEL LAW, Art. 18; REVISED UNIFORM ARBITRATION ACT (“RUAA”), §§ 4(a), 15; UNIFORM ARBITRATION ACT (“UAA”), § 5(b); N.Y. C.P.L.R., Art. 75. 21 See Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 57 (1995); Volt Info. Scis., 489 U.S. at 478; see also Vera v. Saks & Co., 335 F.3d 109, 116 (2d Cir. 2003); Sole Resort, S.A. de C.V. v. Allure Resorts Mgmt., LLC, 450 F.3d 100, 104 (2d Cir. 2006); Glen Rauch Sec., Inc. v. Weinraub, 768 N.Y.S. 2d 611, 611 (1st Dept. 2003) (affirming that “[t]he arbitrators properly sanctioned respondent for his failure to comply with their order directing the production of documents by precluding the testimony of a witness and the introduction of evidence to which the undisclosed documents related”). 22 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), Arts. II(1) & (3), V(1)(d) (enforced in the United 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 553 clauses frequently do not address disclosure issues, as it is difficult for the parties to predict in advance the type of disclosure that would be appropriate in a future dispute.23 More frequently, the parties adopt arbitral and other rules by reference, which may contain specific provisions on disclosure.24 In addition, the arbitral tribunal’s authority to order disclosure may stem from provisions in the procedural laws at the arbitral seat.25 This flexibility to shape the arbitral process according to the specifics of each business relationship is one of the reasons parties choose arbitration over litigation.26 As a general rule, the disclosure phase in an international arbitration tends to be much shorter and succinct. Unless the parties agree otherwise, the rules of civil procedure governing litigation in the local courts of neither the applicable substantive law (lex causae) nor of the seat of the arbitration (lex arbitri) apply to international arbitration.27 While requests for disclosure are common in international arbitration, the scope of disclosure in international arbitration is much narrower compared to that permitted in U.S. litigation. Indeed, the limited availability of disclosure in international arbitration is a key difference between
States pursuant to 9 U.S.C. § 201 (1970)); BORN, supra note 1, at 1879-80; BLACKABY ET AL., § 6.03, at 363. 23 See Gardiner et al., supra note 3, at 274. 24 See, e.g., In re Technostroyexport, 853 F. Supp. 695, 697-98 (S.D.N.Y. 1994) (finding that by incorporating by reference into the arbitration clause arbitral rules, the parties agreed to any provisions relating to disclosure contained in those rules); Brazell v. Am. Color Graphics, Inc., No. M-82, 2000 U.S. Dist. LEXIS 4482, at *3-4 (S.D.N.Y. Apr. 6, 2000); compare ICC RULES, Art. 21; LCIA RULES, Art. 22; INTERNATIONAL ARBITRATION RULES OF THE INTERNATIONAL INSTITUTE FOR CONFLICT PREVENTION AND RESOLUTION (2007) (“CPR RULES”), Art. 11. The INTERNATIONAL ARBITRATION RULES OF THE INTERNATIONAL CENTRE FOR DISPUTE RESOLUTION (2009) (“ICDR RULES”) contain no specific provision for discovery. 25 Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 364 F.3d 274, 291 (5th Cir. 2004) (“Under the New York Convention, an agreement specifying the place of the arbitration creates a presumption that the procedural law of that place applies to the arbitration”); BORN, supra note 1, at 1879; See d’Allaire & Trittmann, supra note 3, at 124-25. 26 BLACKABY ET AL., supra note 1, § 6.01, at 363. 27 Id. § 6.105, at 392; see also Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 31 (1991) (“[A]lthough [discovery] procedures [may] not be as extensive as in the federal courts, by agreeing to arbitrate, a party ‘trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration’”) (quoting Mitsubishi, 473 U.S. at 628; Nat’l Broad. Co. v. Bear Stearns & Co., 165 F.3d 184, 190-91 (2d Cir. 1999) (“The popularity of arbitration rests in considerable part on its asserted efficiency and cost-effectiveness – characteristics said to be at odds with full-scale litigation in the courts, and especially at odds with the broad-ranging discovery made possible by the Federal Rules of Civil Procedure”); AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1749 (2011); Ciago v. Ameriquest Mortg. Co., 295 F. Supp. 2d 324, 333 (S.D.N.Y. 2003); Commonwealth Ins. Co. v. Beneficial Corp., No. 87 Civ. 5056, 1987 WL 17951, at *4-5 (S.D.N.Y. Sep. 29, 1987). 554 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24 judicial and arbitral proceedings.28 Generally, disclosure requests must be sufficiently detailed to identify specific (types of) documents and must provide reasons as to why the information requested is relevant to the dispute and material to its outcome. This disclosure standard is much more restrictive than the “relevancy” test applied by U.S. courts under Rule 26 or similar state statutes, which do not require a separate showing that the requested information is material to the outcome of the dispute.29 Further, the practice of depositions, interrogatories and requests for admission is uncommon in international arbitral proceedings in the United States and elsewhere.30
II. DISCLOSURE POWERS OF INTERNATIONAL ARBITRAL TRIBUNALS IN THE UNITED STATES
A. The Relevant Federal and State Statutory Arbitration Provisions
Due to its federalist system of government, federal and state statutory arbitration provisions potentially apply to delineate the disclosure power of an international arbitral tribunal seated in the United States.31 Thus, two sources of potentially relevant domestic laws for the conduct of the arbitration apply: (1) the Federal Arbitration Act (“FAA”)32 and (2) the statutory arbitration provisions of the state where the proceedings are held. These arbitration laws generally recognize the parties’ autonomy to agree upon the availability, scope and timing of disclosure in the arbitration agreement, or ad hoc after a dispute has arisen.33
28 Gardiner et al., supra note 3, at 273. 29 BLACKABY ET AL., supra note 1, § 6.109, at 394 (noting that a tribunal may deny document requests, where, though relevant, the information requested would not affect the outcome of the proceeding). 30 See, e.g., ICDR GUIDELINES FOR ARBITRATORS CONCERNING EXCHANGES OF INFORMATION (2008) (“ICDR GUIDELINES”), Art. 6(b) (“Depositions, interrogatories, and requests to admit, as developed in American court procedures, are generally not appropriate procedures for obtaining information in international arbitration”); CPR PROTOCOL ON DISCLOSURE OF DOCUMENTS AND PRESENTATION OF WITNESSES IN COMMERCIAL ARBITRATION (2008) (“CPR PROTOCOL”), § 2(c) (requiring “exigent circumstances,” meaning “[w]itness statements are not being used, the parties agree to the taking of the deposition and/or the witness may not be available to testify, in person or by telecommunication, before the tribunal”). A limited number of cases have stated in dicta that depositions may be available under § 7 of the FAA in “unusual circumstances.” See COMSAT Corp. v. Nat’l Sci. Found., 190 F.3d 269, 271, 275-76 (4th Cir. 1999); Nat’l Union Fire Ins. Co. v. Marsh USA, Inc., No. M-82, 2004 U.S. Dist. LEXIS 12716, at *3 (S.D.N.Y. July 9, 2004). 31 In the United States, both the national (federal) government and the various state governments have the power to pass, enforce and interpret laws. See U.S. Constitution, Art. II(8), Amend. X. 32 9 U.S.C. §§ 1-16, 201-208, 301-307. 33 See, e.g., 9 U.S.C. § 2; RUAA, §§ 4(a), 15, 17; UAA, § 5; UNCITRAL MODEL LAW, Art. 19; Volt Info. Scis., 489 U.S. 478; BLACKABY ET AL., § 6.03, at 363. 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 555
1. The Federal Arbitration Act
At the federal level, the FAA governs arbitration, both domestic and international. The FAA was initially introduced in 1925 to eliminate judicial hostility towards arbitration and place arbitration agreements “upon the same footing” as other contracts.34 The FAA now consists of three chapters: (i) General Provisions (Chapter 1, §§ 1-16); (ii) Enforcement of the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) (Chapter 2, §§ 201-208);35 and (iii) Enforcement of the Inter- American Convention on International Commercial Arbitration (“Panama Convention”) (Chapter 3, §§ 301-307).36 Chapter 1 of the FAA governs any written arbitration provision in a “maritime contract or a contract evidencing a transaction involving commerce.”37 Due to the broad definition of “commerce” under the FAA,38 Chapter 1 applies to virtually all international arbitrations seated in the United States.39 Chapter 2 of the FAA contains the provisions for enforcement of the New York Convention, while Chapter 3 contains the provisions for enforcement of the Panama Convention.40 The U.S. Court of Appeals for the Second Circuit held that Chapter 2 of the FAA applies where the arbitration agreement (1) is in writing; (2) provides that the arbitration will be seated in the territory of a signatory to the
34 Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 225-26 (1987) (quoting Scherk v. Alberto-Culver Co., 417 U.S. 506, 510-11 (1974)); see also Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991). 35 The United States acceded to the New York Convention on September 30, 1970, which entered into force for the United States on December 29, 1970. See UNCITRAL, Status – 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, available at http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/ NYConvention_status.html. 36 While open to accession by any state, the Panama Convention has been ratified only by members of the Organization of American States (“OAS”), including numerous Central and South American countries and the United States. The United States signed the Panama Convention on June 9, 1978, which entered into force for the United States on October 27, 1990. See Organization of American States, Inter-American Arbitration Convention on International Commercial Arbitration (Panama Convention), opened for signature Jan 30, 1975, O.A.S.T.S., No. 42, 4138 U.N.T.S. 245, available at http://www.sice.oas.org/dispute/comarb/iacac/iacac2e.asp. 37 9 U.S.C. § 2. 38 “Commerce” is defined as “commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation . . . .” 9 U.S.C. § 1. 39 See GARY BORN & PETER RUTLEDGE, INTERNATIONAL CIVIL LITIGATION IN UNITED STATES COURTS 1162-63 (5th ed. 2011). 40 Both chapters create federal question jurisdiction in U.S. federal district courts for any case “falling under the Convention,” and permit removal of such cases from state to federal court “at any time prior to trial.” 9 U.S.C. §§ 203, 205, 302; see also BORN & RUTLEDGE, supra note 39, at 1163. 556 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24
New York Convention; (3) has a commercial subject matter (as defined by federal law); and (4) is not entirely domestic.41 A similar test would apply to Chapter 3 by analogy.42 A large number of international arbitrations seated in the United States will fall under Chapters 2 or 3.43 Thus, where the arbitration is not “entirely domestic,” both Chapters 1 and 2 or 3 respectively may apply simultaneously.44 In case of a conflict, Chapter 2 or 3 prevails;45 otherwise the parties may choose to enforce their arbitration agreement (or award) under either provision.46
41 Smith/Enron Cogeneration Limited Partnership, Inc. v. Smith Cogeneration Int’l, Inc., 198 F.3d 88, 92 (2d Cir. 1999); Murphy Oil USA, Inc. v. SR Int’l Bus. Ins. Co., No. 07-CV-1071, 2007 U.S. Dist. LEXIS 69732, at *12-13 (W.D. Ark. Sept. 20, 2007); see also 9 U.S.C. § 202. This test incorporates the reciprocity and commercial reservations, under which the United States ratified the New York Convention. The final prong of the test, “not entirely domestic,” corresponds to the New York Convention’s application to arbitration agreements and awards “not considered as domestic.” See New York Convention, Art. I(1). This means that an arbitration agreement or award rendered in an international arbitration seated in the United States may fall under the New York Convention and Chapter 2 of the FAA. See, e.g., Bergesen v. Joseph Muller Corp., 710 F.2d 928, 932 (2d Cir. 1983) (holding that “awards ‘not considered as domestic’ denotes awards which are subject to the Convention not because made abroad, but because made within the legal framework of another country, e.g., pronounced in accordance with foreign law or involving parties domiciled or having their principal place of business outside the enforcing jurisdiction”); Zeiler v. Deitsch, 500 F.3d 157, 164 (2d Cir. 2007); Trans Chem. Ltd. v. China Nat’l Mach. Import & Export Corp., 978 F. Supp. 266, 293 (S.D. Tex. 1997); Lander Co. v. MMP Invs., Inc., 107 F.3d 476, 482 (7th Cir. 1997). 42 9 U.S.C. §§ 202, 302; see also Productos Mercantiles E Industriales, S.A. v. Faberge USA, Inc., 23 F.3d 41, 45 (2d Cir. 1994); Banco de Seguros del Estado v. Mut. Marine Offices, Inc., 230 F. Supp. 2d 362, 371 (S.D.N.Y. 2002) (noting that the Panama Convention incorporates the FAA terms unless they are in conflict with the Convention’s terms); Trans Chem. Ltd., 978 F. Supp. at 294. The Panama Convention applies if a majority of parties to an arbitration agreement are from countries that have ratified the Panama Convention and are members of the OAS. 9 U.S.C. § 305(1); see also Progressive Cas. Ins. Co. v. C.A. Reaseguradora Nacional de Venezuela, 802 F. Supp. 1069, 1074 (S.D.N.Y. 1992), rev’d, 991 F.2d 42 (2d Cir. 1993); Banco de Seguros del Estado, 230 F. Supp. 2d at 368, n.4; Hernandez v. Smart & Final, Inc., No. 09-cv-2266, 2010 U.S. Dist. LEXIS 60755, at *9-10 n.3 (S.D. Cal. June 16, 2010). In all other cases, the New York Convention applies. 9 U.S.C. § 305(2). 43 While some differences exist between the New York and Panama Conventions that may be determinative in certain cases, the conventions are largely similar, and discussion in this article will focus on the New York Convention. 44 See Lander Co., 107 F.3d at 481; Trans Chem. Ltd., 978 F. Supp. at 296, n.126. However, the New York Convention’s reciprocity requirement may preclude its application in certain cases, meaning only Chapter 1 will govern the arbitration. 45 See Lander Co., 107 F.3d at 481; Coutinho Caro & Co. U.S.A., Inc. v. Marcus Trading, Inc., No. 3:95 CV 2362, 2000 U.S. Dist. LEXIS 8498, at *14 n.3 (D. Conn. Mar. 14, 2000) (noting that the New York Convention trumps Chapter 1 of the FAA, to the extent that there is a conflict between their terms). 46 9 U.S.C. § 208; see also Spector v. Torenberg, 852 F .Supp. 201, 205 (S.D.N.Y. 1994); Oil Basins, Ltd. v. Broken Hill Proprietary Co., 613 F. Supp. 483, 487 (S.D.N.Y. 1985); Yusuf Ahmed Alghanim & Sons v. Toys “R” Us, 126 F.3d 15, 20 (2d Cir. 1997) 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 557
Neither the New York nor Panama Conventions specifically address the issue of disclosure in international arbitration proceedings. Section 7 of the FAA provides as follows:
The arbitrators . . . or a majority of them, 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.47
U.S. courts have held that discovery provisions applicable to litigation, such as Rule 26 of the Federal Rules of Civil Procedure, are not applicable in arbitrations seated in the United States, unless otherwise agreed by the parties.48 The parties may also agree to preclude or significantly limit disclosure as long as fundamental principles of procedural fairness and equality are respected.49 As discussed in more detail below,50 U.S. courts are divided as to the power that a tribunal seated in the United States has to order pre-hearing document disclosure and the scope of disclosure and non-party disclosure available under § 7. If the tribunal’s subpoena or disclosure order is not complied with, a U.S. district court at the tribunal’s seat may compel compliance.51 In addition, § 1782 of Title 28 of the U.S. Code permits “foreign and international tribunals” and interested persons to apply to a U.S. federal district court for assistance in the taking of evidence “for use in a proceeding” before such a tribunal seated
(holding that the New York Convention and the FAA provide overlapping coverage, and that a petition to confirm under the Convention does not foreclose a cross-motion to vacate under the FAA); National Educ. Corp. v. Martin, No. 93 C 6247, 1995 U.S. Dist. LEXIS 15707, at *9 (N.D. Ill. Oct. 19, 1995). 47 9 U.S.C. § 7. 48 See, e.g., Great Scott Supermarkets, Inc. v. Local Union No. 337, International Brotherhood of Teamsters, Chauffeurs, and Warehousemen of N. Am., 363 F. Supp. 1351, 1354 (E.D. Mich. 1973) (holding that the Federal Rules of Civil Procedure do not apply to arbitration unless the parties agree otherwise); Commercial Solvents Corp. v. La. Liquid Fertilizer Co., 20 F.R.D. 359, 362 (S.D.N.Y. 1957); Foremost Yarn Mills, Inc. v. Rose Mills, Inc., 25 F.R.D. 9, 11 (E.D. Pa. 1960); Burton v. Bush, 614 F.2d 389, 390 (4th Cir. 1980); JJ-CC, Ltd. v. Transwestern Pipeline Co., No. 14-96-1103-cv, 1998 Tex. App. LEXIS 7090, at *22-23 (Tex. Ct. App. Houston 14th Dist. Nov. 12, 1998); compare In re Koala Shipping & Trading Inc., 587 F. Supp. 14, 143 (S.D.N.Y. 1984) (applying FED. R. CIV. P. 26(b) in a case where the tribunal in a related parallel arbitration referred the parties to the district court judge to obtain a subpoena and discovery order). However, the parties may expressly choose U.S.-style discovery procedures for their dispute. See BORN, supra note 1, at 1884 n.38 Gardiner et al., supra note 3, at 272-73 (noting that parties may opt for “full blown U.S. style discovery” in their international arbitration through incorporation by reference of the discovery provisions in the U.S. Federal Rules of Civil Procedure or the New York Civil Practice Law and Rules). 49 See BORN, supra note 1, at 1884 n.38; UNCITRAL MODEL LAW, Arts. 1(1), 17(1), 27. 50 See infra Section II(D)(2). 51 9 U.S.C. § 7. 558 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24 abroad.52 U.S. courts are divided as to whether this provision applies to international commercial arbitration tribunals.53
2. State Arbitration Statutes
States have adopted their own arbitration laws on matters of domestic and international arbitration. The majority of states have implemented the Uniform Law Commission’s (“ULC”) Uniform Arbitration Act (“UAA”) of 195654 or the Revised Uniform Arbitration Act (“RUAA”) of 2000.55 Both apply to arbitration in general, without specifically addressing the subject of international arbitration.56 Some states have implemented the United Nations Commission on International Trade Law (“UNCITRAL”) Model Law on International Commercial Arbitration (“UNCITRAL Model Law”),57 at times together with provisions taken from the New York Convention, while others, such as New York, have enacted their own statutory provisions on arbitration.58 With regard to a tribunal’s disclosure powers, Section 7 of the UAA provides that “arbitrators may issue (cause to be issued) subpoenas for the attendance of witnesses and for the production of books, records, documents and other evidence . . . .”59 Upon application of a party, tribunals also may permit deposition of a
52 28 U.S.C. § 1782. 53 An analysis of § 1782 is outside of the scope of this article. 54 Colorado, Delaware, District of Columbia, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Maine, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Utah, Virginia. See Uniform Law Commission, Arbitration Act (1956) – Legislative Fact Sheet, available at http://uniformlaws.org/Act.aspx?title=Arbitration Act (1956). 55 Alaska, Arizona, Arkansas, Colorado, District of Columbia, Hawaii, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Utah, Washington. A bill to implement the RUAA in Massachusetts was introduced in 2013. See Uniform Law Commission, Arbitration Act (2000) – Legislative Fact Sheet, available at http://uniformlaws.org/Act.aspx?title=Arbitration Act (2000). 56 See RUAA, Prefatory Note at 6 (noting that twelve states passed arbitration statutes directed to international arbitration). 57 California (1988), Connecticut (1989), Florida (2010) (with amendments as adopted in 2006), Illinois (1998), Louisiana (2006), Oregon (1991), Texas (1989). See UNCITRAL, Status – 1985 UNCITRAL Model Law on International Commercial Arbitration, with Amendments as Adopted in 2006, available at http://www.uncitral.org/uncitral/ en/uncitral_texts/arbitration/1985Model_arbitration_status.html. 58 In 2005, a conglomerate of New York bar associations recommended that the New York legislature adopt the RUAA. See Report on the Revised Uniform Arbitration Act (Dec. 9, 2005), available at http://old.nysba.org/AM/Template.cfm?Section=Committees 2&Template=/CM/ContentDisplay.cfm&ContentFileID=4961. However, to date New York has not implemented the RUAA and follows its Civil Practice Law and Rules in arbitration matters. See N.Y. C.P.L.R., Art. 75 (applicable to domestic and international arbitrations). 59 UAA, § 7(a). 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 559 witness who cannot be subpoenaed or is unwilling to attend a hearing on application of a party.60 Section 17 of the RUAA contains a similar provision, but allows depositions upon the application of a party or witness only where they are necessary to make the “proceedings fair, expeditious, and cost effective.”61 In addition, Section 17 specifically provides that “[a]n arbitrator may permit such discovery as the arbitrator decides is appropriate in the circumstances, taking into account the needs of the parties to the arbitration proceeding and other affected persons and the desirability of making the proceeding fair, expeditious, and cost effective.”62 Section 17 also details the tribunal’s authority to issue discovery-related orders, subpoenas and protective orders, and to take action against a non-complying party to the extent a court could.63 Under the UAA and RUAA, either the arbitral tribunal or a party may seek judicial enforcement of a subpoena issued by the tribunal.64 Further, either the subpoenaed (non-party) witness or the other party on behalf of that witness may file a motion to quash the subpoena or arbitral order. The UNCITRAL Model Law recognizes the parties’ procedural autonomy in Article 19, but does not specifically address disclosure issues.65 Thus, unless the parties have incorporated specific rules on disclosure into their arbitration agreement, the tribunal has broad authority under the Model Law to take and evaluate evidence, as long as the overarching principles of party equality and procedural fairness are respected.66 In Model Law jurisdictions, the tribunal may also request assistance in taking evidence from a competent state court.67 Notably, New York courts recognize an arbitral tribunal’s inherent authority to control the arbitral proceedings, including the disclosure process.68 Under
60 Id. § 7(b). 61 RUAA, § 17(a), (b). 62 Id. § 17(c). 63 Id. § 17(d), (e). 64 UAA, § 7(a); RUAA, § 17(a). 65 UNCITRAL MODEL LAW, Art. 19. 66 Id. Arts. 19(2), 27; see also BORN, supra note 1, at 1880-81 n.21 (noting that Article 26(1)(b) of the Model Law also “strongly implies” that an arbitral tribunal may order disclosure); d’Allaire & Trittmann, supra note 3, at 126; Report of the Secretary- General on the Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration, UN Doc. A/CN.9/264, Art. 19, ¶ 6, XVI Y.B. UNCITRAL 104 (1985); see also JJ-CC, Ltd., 1998 Tex. App. LEXIS 7090, at *24 (holding that, under the Texas Arbitration Act, the arbitral tribunal had the authority to apply the procedural law it considered applicable, absent an agreement by the parties). 67 UNCITRAL MODEL LAW, Art. 27. 68 See, e.g., Credit Suisse First Boston Corp. v. Pitofsky, 824 N.E.2d 929, 932 (N.Y. 2005); Smith Barney Shearson Inc. v. Scharaow, 689 N.E.2d 884, 890 (N.Y. 1997); Siegel v. Lewis, 358 N.E.2d 484, 485 (N.Y. 1976); Radin v. Kleinmann, 299 A.D.2d 236, 236 (1st Dep’t 2002) (holding that “[t]he arbitrators’ limited document production directive was consistent with their ‘inherent power to control the course of the arbitration proceedings so as to permit a party to elicit relevant information’”) (quoting Guilford Mills, Inc. v. Rice Pudding, Ltd., 90 A.D.2d 468, 468 (1st Dep’t 1982) (finding that the 560 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24
§ 7505 of the New York Civil Practice Law and Rules (“C.P.L.R.”), an “arbitrator and any attorney of record in the arbitration proceeding has the power to issue subpoenas.”69 In addition, New York courts may order disclosure “to aid in arbitration”70 in exceptional circumstances.71
3. The Relationship between the FAA and State Arbitration Statutes
The Supremacy Clause of the U.S. Constitution provides that the “Constitution, and the Laws of the United States . . . shall be the supreme law of the land.”72 It is well-established that Congress pursued a “national policy favoring arbitration” in enacting the FAA.73 Thus, the FAA’s standards and the pro-arbitration bias apply in federal and state courts alike,74 irrespective of whether the underlying contract is governed by state or federal law.75 tribunal “has inherent power to control the course of the arbitration proceedings so as to permit a party to elicit relevant information”); Motor Vehicle Accident Indemnification Corp. v. McCabe, 19 A.D.2d 349, 353 (1st Dep’t 1963); see also Gardiner et al., supra note 3, at 278-79. 69 N.Y. C.P.L.R. § 7505. New York courts have interpreted this provision to enable the tribunal to issue subpoenas against third parties as well. See, e.g., In re Sun-Ray Cloak Co., 256 A.D. 620, 625 (1st Dep’t 1939); In re Landegger v. Parson & Whittemore, Inc., 54 N.Y.S.2d 76, 76 (Sup. Ct. Spec. Term N.Y. County 1945), modified, 269 A.D. 736 (N.Y. App. Div. 1945) (holding concerned the New York Civil Practice Act (CPA) §§ 406, 1456, which preceded the N.Y. C.P.L.R.); Matter of Petry Holding Inc. v Rural Media Group Inc., No. 651578/11, 2012 N.Y. Misc. LEXIS 2422, at *7-8 (Sup. Ct. N.Y. County 2012). 70 N.Y. C.P.L.R. § 3102(c). 71 See, e.g., Guilford Mills, 90 A.D.2d at 468 (“Ordinarily, disclosure will not be ordered to aid in arbitration under CPLR 3102 (subd [c]) unless there are extraordinary circumstances present”); Axa Equitable Life Ins. Co. v. Kalina, 101 A.D.3d 1655, 1656 (4th Dep’t 2012) (noting that court-ordered disclosure should “be used sparingly in arbitration and, indeed, the availability of disclosure devices is a significant differentiating factor between judicial and arbitral proceedings”) (internal quotation marks and citation omitted); Block v. Ghirimoldi, No. 106697/11, 2011 N.Y. Misc. LEXIS 4721, at 7-8 (N.Y. Sup. Ct. Oct. 4, 2011) (noting that court-ordered disclosure “is not justified except where it is absolutely necessary for the protection of the rights of a party”) (internal quotation marks and citation omitted); State Farm Mut. Auto. Ins. Co. v. Wernick, 90 A.D.2d 519, 519 (2d Dep’t 1982); Oriental Commercial & Shipping Co. v. Rosseel, N.V., 125 F.R.D. 398, 400 (S.D.N.Y. 1989). 72 U.S. Constitution, Art. VI, § 2. 73 See, e.g., Southland Corp. v. Keating, 465 U.S. 1, 10 (1984); AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1745 (2011); KPMG LLP v. Cocchi, 132 S. Ct. 23, 25 (2011); Compucredit Corp. v. Greenwood, 132 S. Ct. 665, 669 (2012). 74 See Southland, 465 U.S. at 12; Volt Info. Scis., 489 U.S. at 477 n.6; see also BORN & RUTLEDGE, supra note 39, at 1163 n.48. 75 See Marmet Health Care Ctr., Inc. v. Brown, 132 S. Ct. 1201, 1202 (2012) (“State and federal courts must enforce the Federal Arbitration Act (FAA), 9 U.S.C. §1 et seq., with respect to all arbitration agreements covered by that statute”); Compucredit, 132 S. 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 561
The U.S. Supreme Court has long held that the FAA preempts state law regarding issues related to the “front end” of arbitration – the enforcement of the arbitration agreement and issues of substantive arbitrability (§§ 2, 3 and 4 of the FAA).76 In 2008, the Court confirmed that the FAA also preempts state law provisions on the “back end” of arbitration, such as vacatur, confirmation and modification of arbitral awards (covered in §§ 9, 10, 11 and 12).77 However, the FAA does not “occupy” the entire field of arbitration.78 State law may apply to international arbitrations in two ways: (1) where the specific
Ct. at 669 (noting that the FAA applies to federal law in the same way as it does to state law, absent a “contrary congressional command”); Perry v. Thomas, 482 U.S. 483, 489 (1987) (The FAA is “a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act[, and] enforceable in both state and federal courts); Southland, 465 U.S. at 10-12; Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24 (1983); see also BORN & RUTLEDGE, supra note 39, at 1163. 76 See Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 400 (1967) (agreeing with the Second Circuit that §§ 2, 3, and 4 together created a rule “of national substantive law [that] governs even in the face of a contrary state rule”) (internal quotations omitted); Moses H. Cone Mem’l Hosp., 460 U.S. at 24 (holding that § 2 of the FAA “create[s] a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act”); Southland, 465 U.S. at 22 (stating in dissent that the majority’s decision “takes the facial silence of [§] 2 as a license to declare that state as well as federal courts must apply [§] 2 . . . . [and] holds that in enforcing this newly-discovered federal right state courts must follow procedures specified in [§] 3”) (Justice O’Connor, dissenting); Perry, 482 U.S. at 490-91 (considering a California statute that conflicted with § 2 of the FAA, and holding that Congress’ “clear federal policy” to “enforce private agreements” required invalidation of the state statute “under the Supremacy Clause”); Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 282 (1995) (adopting a broad interpretation of the FAA’s preemptive scope that would displace even “state statutes carefully calibrated to protect consumers”) (Justice O’Connor, concurring in the decision to maintain a uniform standard between state and federal courts, but contending that the result had drawbacks). 77 Hall St. Assocs., 552 U.S. at 584, bluntly holding that §§ 10 and 11 “respectively provide the FAA’s exclusive grounds for expedited vacatur and modification.” The Court explained that “expanding the[se] detailed categories would rub too much against the grain of the [§] 9 language, where provision for judicial confirmation carries no hint of flexibility.” Id. at 587. Furthermore, “[i]nstead of fighting the text, it makes more sense to see the three provisions, [§§] 9-11, as substantiating a national policy favoring arbitration with just the limited review needed to maintain arbitration’s essential virtue of resolving disputes straightaway.” Id. at 588. The Court opined that, indeed, “[a]ny other reading opens the door to the full-bore legal and evidentiary appeals that can rende[r] informal arbitration merely a prelude to a more cumbersome and time-consuming judicial review process, and bring arbitration theory to grief in post-arbitration process.” Id. (internal quotation marks and citations omitted). 78 Volt Info. Scis., 489 U.S. at 477; Fensterstock v. Educ. Fin. Partners, 611 F.3d 124, 132 (2d Cir. 2010); Palcko v. Airborne Express, Inc., 372 F.3d 588, 595 (3d Cir. 2004); Bank One, N.A. v. Shumake, 281 F.3d 507, 514 (5th Cir. 2002); see also BORN & RUTLEDGE, supra note 39, at 1163. 562 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24 state law provision is not preempted by the FAA, or (2) where the parties expressly designate a specific state arbitration law to govern the proceedings. First, state arbitration provisions may regulate ancillary matters of the arbitral process, such as consolidation of claims or arbitrator immunity, which are not addressed in the FAA.79 These provisions may apply simultaneously with the FAA (and, if applicable, the New York or Panama Conventions), as long as they are not incompatible with the FAA’s express provisions or overall purpose,80 and do not show an anti-arbitration bias or limit the enforceability of arbitration agreements.81 Second, the principle of party autonomy allows the parties to choose the state arbitration law at the arbitral seat to govern the proceedings. In Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford University, the U.S. Supreme Court upheld a decision by the California Supreme Court, which had to determine whether to apply a state law provision on the stay of arbitration proceedings. Based on the general choice-of-law clause in the underlying agreement containing the arbitration provision, which provided that California law would govern, the court concluded that the California provision on the stay of arbitration proceedings was applicable.82 By contrast, in Mastrobuono v. Shearson Lehman Hutton, Inc., the U.S. Supreme Court held that a general choice-of-law clause, stating that New York law will govern the underlying contract containing the agreement to arbitrate was not sufficient to allow New York’s prohibition on punitive damages in arbitration to apply.83 As the U.S. Supreme Court noted in Mastrobuono, when it decided Volt Information Services, it declined to review the state court’s initial determination that the parties’ choice-of-law provision was intended to encompass both the state’s substantive law and arbitration provisions.84 However, emphasizing that Mastrobuono involved a federal court’s interpretation of the parties’ choice-of- law provision, the Court found a general choice-of-law provision not specific to issues of arbitration to be insufficient to displace the application of the FAA.
79 See, e.g., RUAA, §§ 10, 14; see also BORN & RUTLEDGE, supra note 39, at 1163. 80 See, e.g., Southland, 465 U.S. at 16 (“In creating a substantive rule applicable in state as well as federal courts, Congress intended to foreclose state legislative attempts to undercut the enforceability of arbitration agreements”); Perry, 482 U.S. at 489; Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372-73 (2000); Preston v. Ferrer, 552 U.S. 346, 353 (2008). 81 RUAA, Prefatory Note at 5, 6. 82 Volt Info. Scis., 489 U.S at 470-78 (noting that the FAA did not address the stay of arbitration and the state provision did not show anti-arbitration bias). 83 Mastrobuono, 514 U.S. at 54-60; see also Preston, 552 U.S. at 362-63 (The “best way to harmonize the parties’ adoption of the AAA Rules and their selection of California law is to read the latter to encompass prescriptions governing the substantive rights and obligations of the parties, but not the State’s special rules limiting the authority of arbitrators”) (internal quotation marks and citation omitted). 84 Mastrobuono, 514 U.S. at 60 n.4. 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 563
Lower federal courts have followed this approach.85 For instance, the U.S. Court of Appeals for the Ninth Circuit recently held that there is “a strong default presumption . . . that the FAA, not state law, supplies the rules of arbitration” and that “a general choice of law clause within an arbitration provision does not trump the presumption that the FAA supplies the rules for arbitration.”86 The Supreme Court has since confirmed that its holding in Mastrobuono also applies to state courts.87
85 See, e.g., Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000) (“[I]nclusion of a choice-of-law clause in an arbitration agreement does not incorporate state decisional law pertaining to the allocation of power between courts and arbitrators; rather, at most the clauses read together create an ambiguity that must be construed in favor of arbitration.”); Sovak v. Chugai Pharm. Co., 280 F.3d 1266, 1270 (9th Cir. 2002) (“[A] general choice-of-law clause within an arbitration provision does not trump the presumption that the FAA supplies the rules for arbitration); Paine Webber Inc. v. Elahi, 87 F.3d 589, 594 (1st Cir. 1996) (“[We] find that the choice-of-law clause in this case is not an expression of intent to adopt New York caselaw requiring the courts to [adopt arbitration rules contained in New York caselaw]”); PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1200 (2d Cir. 1996) (“[A] choice-of-law provision, when accompanied by an arbitration provision . . . encompasses substantive principles that New York courts would apply, but not . . . special rules limiting the authority of the arbitrators”) (citation omitted); Prescott v. Northlake Christian Sch., 141 Fed. Appx. 263, 273-74 (5th Cir. 2005) (“We hold that the contract’s silence on limitations of damages, when contrasted with the [ICC] Rules’ express, broad provision for any manner of damages the arbitrator deems acceptable, demonstrates that the arbitrator’s award of damages, even if not available under substantive Louisiana state law, was not expressly contrary to the parties’ contract”); ImClone Sys., Inc. v. Waksal, 22 A.D.3d 387, 387 (1st Dep’t 2005); but see ASW Allstate Painting & Constr. Co. v. Lexington Ins. Co., 188 F.3d 307, 310 (5th Cir. 1999) (The FAA “does not preempt state arbitration rules as long as the state rules do not undermine the goals and policies of the FAA”); Williams v. Cintas Corp., No. 3:03-CV- 00444-L, 2003 U.S. Dist. LEXIS 11147, at *6-7 (N.D. Tex. June 30, 2003) (“In light of the choice-of-law provision contained in the Employment agreement, and considering that the Texas arbitration rules do not undermine the federal policy of the FAA, the court will apply Texas law in determining the scope and applicability of the arbitration agreement in this case”); Vu Luong v. Circuit City Stores, Inc., No. 02-56522, 2001 U.S. Dist. LEXIS 16713, at *7-8 (C.D. Cal. Jan. 30, 2001) (“[T]he FAA can preempt the [application of Virginia arbitration rules] to employment contracts only to the extent that [the Virginia rules] actually conflict[] with the FAA – that is, to the extent that [the Virginia rules] stand[] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress in passing the FAA”) (internal quotation omitted). 86 Sovak, 280 F.3d at 1269-70. 87 In Southland, 465 U.S. at 16, the Supreme Court held that the FAA applies to state court as well as federal court proceedings. In Preston, 552 U.S. at 361-63, it specifically clarified that state courts should follow its holding in Mastrobuono: when a contract contains both a state choice-of-law clause and a clause providing for arbitration in accordance with the rules of a given arbitral body, the state law governs only the “substantive principles that [the state’s] courts would apply.” 564 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24
As for § 7 of the FAA concerning a tribunal’s disclosure power, the U.S. Supreme Court recently affirmed in AT&T Mobility v. Concepcion that the FAA’s intended purpose includes the facilitation of “efficient, streamlined procedures tailored to the type of dispute.”88 In light of this recent decision, state law provisions allowing arbitral tribunals to order extensive U.S.-style discovery far beyond the scope of § 7 may be preempted, unless the parties expressly agreed to them.89 Similar to the class arbitration at issue in AT&T Mobility, full-scale U.S.-style discovery is more formal, more costly, slower, and more likely to create procedural problems90 compared to the limited disclosure process in arbitration. Consequently, it is unlikely that state arbitration provisions will have major application in international arbitration proceedings seated in the United States.91
B. The Relevant Arbitration Rules
To avoid uncertainty, parties will frequently specify that a particular set of arbitral rules will govern the proceedings.92 The tribunal will also look to the rules chosen by the parties to determine the appropriate disclosure process.93 This
88 AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1748, 1751 (2011) (holding that class arbitration interferes with “fundamental attributes of arbitration” because it is more formal, more costly, slower, more likely to create procedural problems, and poses more risks to defendants than bilateral arbitration. Not enforcing the class arbitration waiver, in other words, interferes with arbitration); see also Nat’l Broad. Co. v. Bear Stearns & Co., 165 F.3d 184, 190-91 (2d Cir. 1999) (“The popularity of arbitration rests in considerable part on its asserted efficiency and cost-effectiveness – characteristics said to be at odds with full-scale litigation in the courts, and especially at odds with the broad-ranging discovery made possible by the Federal Rules of Civil Procedure”). 89 See ImClone Sys., 22 A.D.3d at 387 (assuming that § 7 of the FAA preempts state law procedural rules on disclosure in arbitration); see also BORN, supra note 1, at 1883 n.35. Specifically as to the validity and enforceability of arbitrator subpoenas against third parties, a couple of lower federal courts have explicitly held that § 7 of the FAA “is the only source of the authority,” after reviewing state arbitration provisions. See Hay Group, Inc. v. E.B.S. Acquisition Corp., 360 F.3d 404, 406 (3d Cir. 2004); Connectu, Inc. v. Quinn Emanuel Urquhart Oliver & Hedges, No. 602082/08, slip op., at 10, 13 n. 6 (N.Y. Sup. Ct. Jan. 6, 2010) (stating the New York state arbitration law is inapplicable). 90 AT&T Mobility, 131 S. Ct. at 1751. 91 See BORN & RUTLEDGE, supra note 39, at 1161. 92 Section 7 of the FAA arguably grants the tribunal a narrower power to order disclosure than some of the leading arbitration rules. See BORN, supra note 1, at 1883. 93 See, e.g., In re Technostroyexport, 853 F. Supp. 695, 697-98 (S.D.N.Y. 1994) (finding that by incorporating arbitral rules into the arbitration by reference, the parties agreed to any provisions relating to disclosure contained in those rules); Life Receivables Trust v. Syndicate 102 at Lloyd’s of London, 549 F.3d 210, 218 (2d Cir. 2008) (noting that an arbitrator’s authority to compel discovery from the parties to an arbitration does not extend to non-parties, because only the parties “contractually agreed to abide by [the discovery rules of an arbitral association], which are incorporated by reference into the contract”). 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 565 section will discuss the relevant provisions of the most frequently used arbitral rules for international arbitrations seated in the United States.
1. The International Arbitration Rules of the International Centre for Dispute Resolution
The International Arbitration Rules of the International Centre for Dispute Resolution (“ICDR Rules”), the international arm of the American Arbitration Association (“AAA”), do not expressly address the tribunal’s disclosure power. However, Article 16 of the ICDR Rules provides that “the tribunal may conduct the arbitration in whatever manner it considers appropriate . . .”94 In addition, Article 19 of the ICDR Rules enables the tribunal to “order parties to produce other documents, exhibits or other evidence it deems necessary or appropriate” at any time during the proceedings.95 In 2008, the ICDR also issued mandatory Guidelines for Arbitrators Concerning Exchanges of Information (“ICDR Guidelines”), which “make it clear to arbitrators that they have the authority, the responsibility and, in certain jurisdictions, the mandatory duty to manage arbitration proceedings,” including the exchange of information among parties.96 Article 3 of the ICDR Guidelines provides as follows:
[T]he tribunal may, upon application, require one party to make available to another party documents in the 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.97
The ICDR Guidelines also establish that “[d]epositions, interrogatories, and requests to admit, as developed in American court procedures, are generally not appropriate procedures for obtaining information in international arbitration.”98
94 ICDR RULES (2009), Art. 16(1). 95 Id. Art. 19(3). See, e.g., Chiarella v. Viscount Indus. Co., No. 92 Civ. 9310, 1993 WL 497967, at *4 (S.D.N.Y. Dec. 1, 1993) (holding that similar language in the arbitral rules of the AAA enabled the tribunal to order pre-hearing discovery); Life Receivables Trust, 549 F.3d at 218 (holding that the arbitral rules of the AAA authorize arbitrators to subpoena witnesses or documents from parties to the arbitration proceeding); see also BORN, supra note 1, at 1890; Gardiner et al., supra note 3, at 275. 96 ICDR GUIDELINES (2008), Art. 3(a). The ICDR Guidelines will be reflected in the next amendment of the ICDR Rules. Id. 97 Id. Art. 3(a). The ICDR Guidelines further address the disclosure of electronic documents as well as inspections and encourage the tribunal to “be receptive of creative solutions for achieving exchanges of information.” Id. Arts. 4, 5, 6(a). 98 Id. Art. 6(b). 566 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24
2. The Rules of Arbitration of the International Chamber of Commerce
Similarly, the Rules of Arbitration of the International Chamber of Commerce (“ICC Rules”) provide that “the arbitral tribunal, after consulting the parties, may adopt such procedural measures as it considers appropriate, provided that they are not contrary to any agreement of the parties.”99 In addition, the tribunal may “establish the facts of the case by all appropriate means”100 and “summon any party to provide additional evidence.”101 This broad grant of authority implies the tribunal’s power to “order one party to introduce certain internal documents into the arbitral proceedings upon request of the other party.”102
3. The Arbitration Rules of the London Court of Arbitration
The Arbitration Rules of the London Court of Arbitration (“LCIA Rules”) are explicit on the tribunal’s power to order disclosure. Article 22.1 provides that the tribunal may “on the application of any party or its own motion . . . order any party to produce to the Arbitral Tribunal, and to the other parties for inspection, and to supply copies of, any documents or classes of documents in their possession, custody or power which the Arbitral Tribunal determines to be relevant.”103 In addition, the tribunal may order inspection of “any property, site or thing” under a party’s control and relating to the dispute.104 These provisions leave no doubt that an arbitral tribunal constituted under the LCIA Rules has broad authority to order disclosure.105
99 ICC RULES (2012), Art. 22(2). 100 Id. Art. 25(1). 101 Id. Art. 25(5). Appendix IV of the ICC Rules on Case Management Techniques further provides tribunals with additional techniques on managing the production of documentary evidence. ICC RULES, Appx IV, at (d); see also ICC Commission on Arbitration, Techniques for Controlling Time and Costs in Arbitration, ¶¶ 51, 52 (recommending to limit the number and scope of document requests). 102 David W. Rivkin, ALI-ABA Course of Study, Trial Evidence in the Federal Courts: Problems and Solutions, Commentary on the New Rules of Evidence in International Commercial Arbitration, SK063 ALI-ABA 751, 758 (2004) (discussing the predecessor of Article 25 in the 1998 ICC Rules). For discussion of Article 25’s predecessor provision in the 1998 ICC Rules, see, e.g., BORN, supra note 1, at 1889-90; YVES DERAINS & ERIC SCHWARTZ, A GUIDE TO THE ICC RULES OF ARBITRATION 281 (2d ed. 2005); MICHAEL BÜHLER & THOMAS H. WEBSTER, HANDBOOK OF ICC ARBITRATION: COMMENTARY, PRECEDENTS, MATERIALS 259-65 (2d ed. 2005); W. LAURENCE CRAIG ET AL., INTERNATIONAL CHAMBER OF COMMERCE ARBITRATION ¶ 26.01, at 451 (3d ed. 2000); Bernard Hanotiau, Document Production in International Arbitration: A Tentative Definition of “Best Practices,” in DOCUMENT PRODUCTION IN INTERNATIONAL ARBITRATION 113, 114 (ICC Ct. Bull. Spec. Supp. 2006); Gardiner et al., supra note 3, at 275. 103 LCIA RULES, Art. 22.1(e). 104 Id. Art. 22.1(d). 105 See BORN, supra note 1, at 1888. 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 567
4. The Arbitration Rules of the United Nations Commission on International Trade Law
The Arbitration Rules of the United Nations Commission on International Trade Law (“UNCITRAL Rules”) provide the tribunal with broad powers regarding disclosure. Article 27 provides that “at any time during the arbitral proceedings the arbitral tribunal may require the parties to produce documents, exhibits or other evidence.”106
5. The International Arbitration Rules of the International Institute for Conflict Prevention and Resolution
The Rules for Non-Administered Arbitration of International Disputes of the International Institute for Conflict Prevention and Resolution (“CPR Rules”) grant discretion to the tribunal to “conduct the arbitration in such manner as it shall deem appropriate.”107 For instance, the tribunal shall conduct a pre-hearing conference on “[p]rocedural matters (such as setting specific time limits for and manner of, any required discovery).”108 Further, under Rule 11, the tribunal “may require and facilitate such disclosure as it shall determine is appropriate in the circumstances, taking into account the needs of the parties and the desirability of making discovery expeditious and cost-effective.”109 In addition, the CPR Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration (“CPR Protocol”) clarifies the boundaries of disclosure in international arbitration. The CPR Protocol sets out general principles for document disclosure and witness testimony and provides the parties with an opportunity to adopt certain suggested modes of document disclosure.110 Parties may adopt these modes in arbitrations under the CRP Rules or under other institutional or ad hoc arbitral rules.111 The CPR Protocol clarifies the boundaries of disclosure under Rule 11 of the CPR Rules to information for which a party has a “substantial, demonstrable need in order to present its position.”112 Notably, the CPR Protocol contemplates the possibility of depositions “in exigent circumstances” in international arbitration proceedings.113
106 UNCITRAL RULES (2010), Art. 27(3). 107 CPR RULES (2007), R. 9(1). 108 Id. R. 9(3)(a). 109 Id. R. 11. 110 CPR PROTOCOL (2008), Preamble, ¶ 1, § 1 Sched. 1 (ranging from Mode A (no disclosure) to Mode D (extensive disclosure)). 111 Id. Introduction, ¶ 1. 112 Id. § 1(a). 113 Id. § 2(c) (“Depositions should be permitted only where the testimony is expected to be material to the outcome of the case and where one or more of the following exigent circumstances apply: Witness statements are not being used, the parties agree to the taking of the deposition and/or the witness may not be available to testify, in person or by 568 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24
6. The International Bar Association’s Rules on the Taking of Evidence in International Arbitration
The International Bar Association’s Rules on the Taking of Evidence in International Arbitration (“IBA Rules”) are not arbitral rules per se, but are designed to be used in conjunction with institutional or ad hoc rules governing international arbitration.114 The arbitral rules discussed above, while granting implied or express authority to a tribunal to order disclosure, are mostly silent on the disclosure process itself. The IBA Rules may serve to close this gap. The IBA Rules reflect a compromise between the procedures used in many different legal systems, and are thus particularly useful when the parties come from different legal cultures.115 As a result, the IBA Rules adopt a somewhat restrictive approach to disclosure and do not provide for depositions.116 The IBA Rules have become the commonly used procedural framework for disclosure in international arbitration and are generally recognized as “the international standard for an effective, pragmatic, and relatively economical document production regime.”117 Short of adopting the IBA Rules, the parties frequently provide that the tribunal should be “guided” by them,118 allowing a tribunal to maintain its discretionary powers over the disclosure process, while providing a suggested framework for the disclosure process.119 There may be instances where the IBA Rules are not appropriate, and a tribunal would be inclined to adopt more restrictive disclosure. For instance, where both parties come from the same legal tradition with very limited disclosure, a tribunal may adopt more limited disclosure mechanism in accordance with both parties’ expectations.120
telecommunication, before the tribunal. The tribunal should impose strict limits on the number and length of any depositions allowed.”). 114 IBA RULES (2010), Foreword, ¶ 2. 115 Id.; see also IBA Working Party, Commentary on the New IBA Rules of Evidence in International Commercial Arbitration, 2000 BUS. L. INT’L 14, 19 (“These rules . . . represent a well-balanced compromise between the broader view generally taken in common law countries and the more narrow view held generally in civil law countries”); Robert von Mehren & Claudia Salomon, Submitting Evidence in an International Arbitration: The Common Lawyer’s Guide, 20(3) J. INT’L ARB. 285, 292 (2003). However, the IBA Rules may be inappropriate where the law governing the dispute requires a party to meet a high burden of proof, and provides tools for obtaining such evidence in a domestic context that may not be available under the IBA Rules’ more limited disclosure mechanism. See d’Allaire & Trittmann, supra note 3, at 131. 116 See IBA RULES (2010), Art. 3. 117 See BLACKABY ET AL., supra note 1, at § 6.107, at 393. 118 See IBA RULES (2010), Art. 1, ¶ 5. Even where the arbitration agreement does not reference the IBA Rules, parties and tribunals regularly refer to them for guidance. See Gardiner et al., supra note 3, at 278. 119 See d’Allaire & Trittmann, supra note 3, at 132. 120 Id. at 125. 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 569
In sum, arbitral tribunals generally have broad implied authority to conduct the disclosure process, even where the relevant arbitral rules (and domestic arbitration legislation) do not specifically address the issue.121 This is consistent with the expectations of most parties in international arbitration.122 The only limitations to the tribunal’s authority are the parties’ arbitration agreement as well as principles of procedural fairness and due process.123
C. The Tribunal’s Disclosure Power as to Parties to the Arbitral Proceedings
1. Document Disclosure
Documents are usually an integral part of the evidence submitted in any arbitration.124 Generally, a party will produce to the tribunal the documents on which it intends to rely at an early stage in the proceedings, most commonly with its written statements.125 This is relatively uncontroversial.126 Conversely,
121 See BORN, supra note 1, at 1886; Gardiner et al., supra note 3, at 278; see also Nat’l Boatland, Inc. v. ITT Commer. Fin. Corp., 2000 U.S. App. LEXIS 24783, at *5-6 (6th Cir. Sept. 19, 2000) (confirming that “[a]rbitrators are not bound by formal rules of procedure and evidence, and the standard for judicial review of arbitration procedures is merely whether a party to arbitration has been denied a fundamentally fair hearing”); InterChem Asia 2000 Pte. Ltd. v. Oceana Petrochems., A.G., 373 F. Supp. 2d 340, 352 (S.D.N.Y. 2005) (confirming an arbitration award in proceedings brought before the American Arbitration Association, and observing that “any and all decisions concerning the procedure of the arbitration, including any discovery procedures, were well within the arbitrator’s discretion”), amended on other grounds, 378 F. Supp. 2d 347 (S.D.N.Y. 2005); Mallory Factor Inc. v. W. Coast Entm’t Corp., No. 99 Civ. 4819, 1999 WL 1021076, at *3 (S.D.N.Y. Nov. 9, 1999) (confirming an arbitration award in proceedings brought before the American Arbitration Association, and noting that “the Arbitrator has wide discretion in determining whether or not to hear evidence at the hearing”); Int’l Longshoremen’s Ass’n v. W. Gulf Mar. Ass’n, 605 F. Supp. 723, 727 (S.D.N.Y. 1985) (confirming an arbitration award in proceedings brought before a trade-specific arbitral body known as the Emergency Hearing Panel (EHP), and stating that “[r]esolution of the procedural matters arising out of arbitration are generally left to the arbitrators”) . 122 See BORN, supra note 1, at 1886. 123 Id. at 1886; BLACKABY ET AL., supra note 1, at 363. 124 For a more detailed discussion of evidence categories in international arbitration, see, e.g., BLACKABY ET AL., supra note 1, at 386; LEW ET AL., supra note 3, at 564; von Mehren & Salomon, supra note 115, at 290-92. 125 BLACKABY ET AL., supra note 1, at 390-91; von Mehren & Salomon, supra note 115, at 287; Gardiner et al., supra note 3, at 280; d’Allaire & Trittmann, supra note 3, at 122; see also ICDR GUIDELINES, Art. 2; ICC RULES, Art. 20(2); LCIA RULES, Art. 15.6; UNCITRAL RULES (2010), Art. 20(4); CPR RULES, Rule 12.1(e); IBA RULES (2010), Art. 3(1). Under Article 3(13) of the IBA Rules, any documents submitted or produced by a party or non-party to the arbitration must be kept confidential, unless it is in the public domain. 126 While there are no fixed rules on admissibility, arbitral tribunals generally assess the weight of a certain piece of evidence put before them, rather than limiting its 570 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24 requests to produce additional documents by the opposing party or the tribunal are much more contentious, as the information sought may be damaging to the requested party’s case. In practice, the arbitral tribunal will set forth a timetable for the proceedings, including document disclosure, in a procedural order. Document requests may consist of an informal letter request to the other party or may be made in a more formal request for production to the tribunal.127 The IBA Rules adopt the latter approach.128 Under the IBA Rules, document requests are generally made after the parties’ initial exchange of documents.129 The term “document” is defined broadly as any “writing, communication, picture, drawing, program or data of any kind, whether recorded or maintained on paper or by electronic, audio, visual or any other means.”130 Under the IBA Rules, a request to produce must contain a “description in sufficient detail” to identify the document or “narrow and specific requested category” of documents requested.131 Further, the requesting party must state how the requested documents are “relevant to the case” and “material to its outcome.”132 Lastly, the requesting party must state that the requested documents are not in its “possession, custody or control” and its reasons to believe that the documents are in the “possession, custody and control” of the other party.133 The other party must then either produce the documents within the time indicated by the tribunal or state its objections.134 Before ruling on the objections, the tribunal may hold a case management conference with parties’ counsel to agree on a compromise for each requested document category in an attempt to limit the scope of the parties’ requests for production.135 Requests for production are generally made in form of a “Redfern Schedule,” which crystallizes the issues in dispute to facilitate the tribunal’s ruling.136 A classic Redfern Schedule is completed by both parties and consists of several columns: (1) Number of Request; (2) Document(s) Requested; (3) Reasons for Request; (4) Objections by Requested Party; (5) Reply by Requesting Party; and (6) Tribunal’s Ruling. Using a “Redfern Schedule” for each party’s document admissibility. For a more detailed discussion of questions of admissibility and burden of proof in international arbitration, see, e.g., BLACKABY ET AL., supra note 1, at 386; von Mehren & Salomon, supra note 115, at 290-92; LEW ET AL., supra note 3, at 565. 127 Gardiner et al., supra note 3, at 280. 128 IBA RULES (2010), Art. 3(2). 129 Gardiner et al., supra note 3, at 280; BLACKABY ET AL., supra note 1, at 394. 130 IBA RULES (2010), Definitions at ¶ 3. 131 Id. Art. 3(3)(a). 132 Id. Art. 3(3)(b). 133 Id. Art. 3(3)(c). 134 Id. Art. 3(4), 3(5). The reasons for objecting to production are set out in Articles 3(3) and 9(2) of the IBA Rules. 135 BLACKABY ET AL., supra note 1, §§ 6.111-6.112, at 395; d’Allaire & Trittmann, supra note 3, at 122. 136 BLACKABY ET AL., supra note 1, §§ 6.113-6.116, at 395-96. 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 571 requests may help avoid the need for a case management meeting, saving costs and reducing delays.137 As discussed above, it is generally recognized that arbitral tribunals have the power to order document disclosure, where the parties have so agreed in their arbitration agreement, by incorporating arbitral rules or otherwise.138 However, where the parties have not agreed to grant the tribunal broad disclosure powers, § 7 of the FAA (and any relevant state-law provision) becomes determinative of the tribunal’s authority to order disclosure. Importantly, there is no practice of automatic document disclosure in international arbitration.139 Section 7 provides that a tribunal may only order “any person to attend” a hearing as a witness and “in a proper case to bring with him . . . any book, record, document, or paper which may be deemed material as evidence in the case.”140 As for parties to the arbitration proceedings, this grant of authority is arguably narrower than that under the leading arbitral rules discussed above.141 However, U.S. courts have generally interpreted § 7 of the FAA broadly and beyond its strict literal meaning. Several U.S. courts have held that arbitral tribunals sitting in the United States have broad implied powers to order whatever scope of document disclosure they consider appropriate and beyond strictly “material” information.142
137 BLACKABY ET AL., supra note 1, § 6.116, at 396. 138 See supra at Sec. II(B). 139 See d’Allaire & Trittmann, supra note 3, at 119; ALAN REDFERN & MARTIN HUNTER WITH NIGEL BLACKABY & CONSTANTINE PARTASIDES., LAW AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION § 6-71, at 299 (4th ed. 2004) (“There is no practice of automatic discovery in international commercial arbitration. The usual practice is to limit document production as much as possible to those documents that are strictly relevant to the issues in dispute and necessary for the proper resolution of those issues.”) (emphasis in original). 140 9 U.S.C. § 7. 141 See BORN, supra note 1, at 1886. 142 See, e.g., Stanton v. Paine Webber Jackson & Curtis, Inc., 685 F. Supp. 1241, 1242 (S.D. Fla. 1988) (“[U]nder the Arbitration Act, the arbitrators may order and conduct such discovery as they find necessary”); Chiarella, 1993 WL 497967, at *4 (stating that the American Arbitration Association rules provide that “[t]he parties shall produce such evidence as the arbitrator may deem necessary to an understanding and determination of the dispute,” and that this “confers on arbitrators broad powers to ensure that evidence is presented at arbitration hearings in such a manner as to ensure that legal and factual issues are sufficiently developed;” thus, the arbitrator’s pre-hearing discovery orders were permissible even though they were “unusual for an arbitration proceeding” and the “[controlling contract’s] language does not specifically authorize an arbitrator to order pre- hearing discovery”); see also United Nuclear Corp. v. Gen. Atomic Corp., 597 P.2d 290, 302 (N.M. 1979); Alcatel Space SA v. Loral Space & Comm., Ltd., No. 02 Civ. 2674, 2002 U.S. Dist. LEXIS 11343, at *18-19 (S.D.N.Y. June 25, 2002). More generally, the Supreme Court has declared that an arbitrator may “look for guidance from many sources, [and] his award is legitimate . . . so long as it draws its essence from the collective bargaining agreement.” United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 597; see also Manville Forest Products Corp. v. United Paperworkers Int’l Union, 831 F.2d 72, 75-76 (5th Cir. 1987) (“Following the lead of the Supreme Court, this 572 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24
Further, U.S. courts generally interpret § 7 to enable a tribunal to order a party to the arbitration to disclose documents in advance of any hearing.143
2. Witness Testimony Witness testimony is another key element of evidence submitted in an arbitration.144 As part of its disclosure powers, the tribunal generally controls the procedure in which witness testimony is given, provided general principles of equality and procedural fairness are respected.145 Similar to documentary evidence, the IBA Rules provide that each party “identify the witnesses on whose testimony it intends to rely.”146 Generally, parties will submit written witness statements, either in the form of a signed statement or sworn affidavit, together with or after their written submissions.147 Each party and the tribunal may request the presence of party witnesses at the hearing, and ultimately the tribunal has
Circuit and others have refused to apply contract-law concepts, such as the parole evidence rule, to collective bargaining agreements . . . The arbitrator may determine that the written contract is ambiguous and then turn to extrinsic evidence”) (internal citation omitted). However, the IBA Rules require a party to show that the information is “material to the outcome” of the case. See IBA RULES (2010), Art. 3(3)(a). 143 See, e.g., Arbitration between Brazell v. Am. Color Graphics, No. M-82 AGS, 2000 WL 364997, at *2 (S.D.N.Y. April 7, 2000) (“This section [7 of the FAA] has been interpreted by the courts specifically to include subpoenas of documents, where the documents are relevant to the requesting party’s inquiry”); In re Complaint of Koala Shipping & Trading, Inc., 587 F. Supp. 140, 142 (S.D.N.Y. 1984) (holding that § 7 “authorizes arbitrators to subpoena individuals and documents”); In re Technostroyexport, 853 F. Supp. 695, 697 (S.D.N.Y. 1994) (“Pre-hearing discovery between parties is ‘a matter governed by the applicable arbitration rules (as distinct from court rules) and by what the arbitrator decides’”); Chiarella, 1993 WL 497967, at * 1 (arbitrators did not exceed authority by ordering the parties “to mutually exchange all documents and witness lists (i.e. full discovery)”); Life Receivables Trust v. Syndicate 102 at Lloyd’s of London, 549 F.3d 210, 217 (2d Cir. 2008) (stating in obiter dicta that “[a]lthough section 7 does not distinguish between parties and non-parties to the actual arbitration proceeding, an arbitrator’s power over parties stems from the arbitration agreement, not section 7”) (emphasis in original). 144 Parties to international arbitration proceedings may present expert witness testimony and written expert reports to the tribunal, and tribunals may appoint experts to report on a specific issue as well. See generally LEW ET AL., supra note 3, §§ 22-80 et seq., at 575-78 ; BLACKABY ET AL., supra note 1, §§ 6.152 et seq., at 406-10. A detailed discussion of expert witnesses is beyond the scope of this article. 145 See LEW ET AL., supra note 3, § 22-62, at 570. 146 IBA RULES (2010), Art. 4(1); see also LCIA RULES, Art. 20.1; ICDR RULES, Art. 20(2); CPR RULES (2007), Art. 12(1)(e). 147 See IBA RULES (2010), Art. 4(4); LCIA RULES, Art. 20.3; ICDR RULES, Art. 20(5); CPR RULES (2007), Commentary on Individual Rules, Art. 12; UNCITRAL RULES, Art. 27(2); see also LEW ET AL., supra note 3, § 22-66, at 571; BLACKABY ET AL., supra note 1, § 6.137, at 401-02; von Mehren & Salomon, supra note 115, at 286-87. The IBA Rules set forth details as to the form and contents of a witness statement. IBA RULES (2010), Art. 4(5). 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 573 authority to decide whether, how, where and when witnesses may be examined.148 Tribunals frequently issue a procedural order on the way in which witness examination will take place.149 Where the witness has submitted a detailed witness statement, this statement will frequently serve as direct examination of the witness (occasionally tribunals will still allow a brief direct examination). At the hearing, the focus will then lie on the cross-examination and re-direct of the witness. Most national arbitration laws do not expressly grant a tribunal the power to order a party to produce a witness within its control (such as its corporate officers, directors or employees).150 Similarly, most institutional rules are silent on this issue.151 Section 7 of the FAA expressly grants a tribunal the power to “summon in writing any person to attend before them or any of them as a witness.”152 This is uncontroversial.153
148 See IBA RULES (2010), Art. 8(1); LCIA RULES, Art. 20.4; see also LEW ET AL., supra note 3, §§ 22-66 et seq., at 571-72; BLACKABY ET AL., supra note 1, § 6.96, at 387-88; Von Mehren & Salomon, supra note 115, at 288. 149 See LEW ET AL., supra note 3, §§ 22-69 – 22-70, at 572-73. 150 See BORN, supra note 1, at 1900-1901. Notably, in international arbitration, any person (including party employees, officers and directors) may testify as a witness. See LEW ET AL., supra note 3, §§ 22.65, at 570; BLACKABY ET AL., supra note 1, § 6.141, at 403-04 (noting that the rules of court in some civil law countries forbid parties (including party officers or employees) from being treated as witnesses in their own cause, but even in the courts of these countries a party can be heard – the rule merely forbids them from being categorized as witnesses.); see also IBA RULES (2010), Art. 4(2); LCIA RULES, Art. 20.7. 151 See BORN, supra note 1, at 1900. Some rules allow a tribunal to discount or strike from the record a written witness statement, where the witness does not testify at the hearing if so requested. See, e.g., LCIA RULES, Art. 20.4; IBA RULES (2010), Art. 4(8). 152 9 U.S.C. § 7. In any case, even absent a specific provision in the parties’ arbitration agreement, the arbitral rule or the arbitration law at the seat, tribunals generally have implied power to order a party to produce a witness within its control at the hearing. See BORN, supra note 1, at 1901 (analogizing a tribunal’s power to order a party to produce documents within its control). 153 Indeed, the circuits seem to take it as given that § 7 grants arbitrators the power to summon any person as a witness; starting from this axiom, they go on to disagree over whether or not such summoning power implicitly empowers arbitrators to issue prehearing document subpoenas from non-parties without summoning them as a witness. See, e.g., Sec. Life Ins. Co. of Am. v. Duncanson & Holt, Inc. (In re Sec. Life Ins. Co. of Am.,), 228 F.3d 865, 870-71 (8th Cir.2000) (holding that although § 7 does not “explicitly authorize” arbitrators to require the production of documents from absent non-parties, such power is implicit in a tribunal’s § 7 power to call any witness before it at a hearing and require him/her to produce documents at that time); COMSAT Corp. v. Nat’l Sci. Found., 190 F.3d 269, 275 (4th Cir.1999) (finding the same where there is a “special need” for the documents); compare Life Receivables Trust v. Syndicate 102 at Lloyd’s of London, 549 F.3d 210, 218 (2d Cir. 2008) (holding that “those relying on section 7 of the FAA must do so according to its plain text, which requires that documents be produced by a testifying witness”); Hay Group, Inc. v. E.B.S. Acquisition Corp., 360 F.3d 404, 407 (3d Cir. 2004) (holding the same). 574 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24
A tribunal’s power to order pre-hearing party depositions may be derived from the parties’ arbitration agreement, the arbitral rules or the law at the seat of the arbitration proceedings.154 Depositions are “recorded sessions at which witnesses are questioned by the parties outside the presence of the tribunal, enabling the parties to obtain information from witnesses in advance of their testifying at the hearings.”155 However, most arbitral rules and national laws are silent on this issue.156 Arguably, a tribunal’s power to order party depositions is no different from its power to order a party to produce documents, and thus is implied.157 While not infrequent in domestic arbitrations in the United States,158 depositions generally are considered inappropriate in international arbitration proceedings.159 In international arbitrations with a U.S. nexus, parties may voluntarily agree to depositions. However, tribunals are unlikely to order party depositions in international arbitrations, including in proceedings seated in the United States, when one party objects to them.160 However, where a tribunal orders depositions of witnesses within a party’s control, such as an employee, officer or director, there may only be limited grounds for objection.161
154 See BORN, supra note 1, at 1904-05. 155 CPR PROTOCOL, Art. 2(c); see also FED. R. CIV. P. 30, 31. 156 But see ICDR GUIDELINES, Art. 6(b) (“Depositions, interrogatories, and requests to admit, as developed in American court procedures, are generally not appropriate procedures for obtaining information in international arbitration”); CPR PROTOCOL, Art. 2(c) (requiring “exigent circumstances,” meaning “[w]itness statements are not being used, the parties agree to the taking of the deposition and/or the witness may not be available to testify, in person or by telecommunication, before the tribunal”). 157 See BORN, supra note 1, at 1905. 158 See, e.g., RUAA, § 17(b) (“In order to make the proceedings fair, expeditious, and cost effective, upon request of a party to or a witness in an arbitration proceeding, an arbitrator may permit a deposition of any witness to be taken for use as evidence at the hearing, including a witness who cannot be subpoenaed for or is unable to attend a hearing.”); AAA RULES, Art. L-3(f), L-4(d). 159 See BORN, supra note 1, at 1903; Gardiner et al., supra note 3, at 285; see also ICDR GUIDELINES, Art. 6(b) (“Depositions, interrogatories, and requests to admit, as developed in American court procedures, are generally not appropriate procedures for obtaining information in international arbitration”); CPR PROTOCOL, Art. 2(c) (requiring “exigent circumstances,” meaning “[w]itness statements are not being used, the parties agree to the taking of the deposition and/or the witness may not be available to testify, in person or by telecommunication, before the tribunal”). A limited number of cases have stated in dicta that depositions may be available under § 7 of the FAA in “unusual circumstances.” See COMSAT Corp. v. Nat’l Science Found., 190 F.3d 269, 271, 275-76 (4th Cir. 1999); Nat’l Union Fire Ins. Co. v. Marsh USA, Inc. (In re Hawaiian Elec. Indus.), No. M-82, 2004, U.S. Dist. LEXIS 12716, at *3 (S.D.N.Y. July 9, 2004); Deiulemar Compagnia di Navigazione SpA v. M/V Allegra, 198 F.3d 473, 479-80 (4th Cir. 1999); Gresham v. Norris, 304 F. Supp. 2d 795, 796 (E.D. Va. 2004). 160 See BORN, supra note 1, at 1903; Gardiner et al., supra note 3, at 285. 161 See BORN, supra note 1, at 1904-05. 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 575
3. Interrogatories, Requests for Admission and Other Means of Disclosure and Presentation of Evidence
In U.S. litigation, interrogatories (also known as requests for information) consist of written questions that may relate to any “discoverable” issue, which a party is required to answer within a specific time under the direction of a court.162 On the other hand, requests for admission consist of a written request to admit the truth of any “discoverable” issue.163 These means of disclosure arguably fall within the tribunal’s general disclosure power and may in certain cases expedite the taking of evidence, for instance where a party is seeking an answer to a straightforward question.164 However, in most international arbitration proceedings, interrogatories and requests for admission are infrequently used and likely inappropriate.165 Tribunals also have the power to order a party to permit site or subject-matter inspections, considered means of presentation of evidence.166 However, inspections are rare and mostly occur in construction, engineering and mining disputes, where a tribunal may have to evaluate the state of affairs of property.167
D. The Tribunal’s Disclosure Power as to Non-Parties to the Arbitral Proceedings
The parties’ agreement to arbitrate creates inter partes rights and obligations, but does not generally bind third parties to the arbitration.168 Thus, a tribunal’s
162 See FED. R. CIV. P. 33, and 26(b)(2). Answers to interrogatories are generally prepared by a party’s counsel in writing. 163 See FED. R. CIV. P. 36, and 26(b)(2). 164 See BORN, supra note 1, at 1902. 165 See Siegfried H. Elsing & John M. Townsend, Bridging the Common Law Civil Law Divide in Arbitration, 18 ARB. INT’L 59, 62 (2002) (noting that the IBA Rules – developed as a middle ground between common law systems (which favor liberal discovery) and civil law systems (which do not) – contain no provision for interrogatories); BORN, supra note 1, at 1902-03; Gardiner et al., supra note 3, at 285; see also ICDR GUIDELINES, Art. 6(b) (“Depositions, interrogatories, and requests to admit, as developed in American court procedures, are generally not appropriate procedures for obtaining information in international arbitration”). 166 See, e.g., UNCITRAL MODEL LAW, Art. 24(2); IBA RULES (2010), Art. 7; ICDR GUIDELINES, Art. 5 (requiring a party application and a showing of good cause); CPR RULES, Art. 9(3)(a); LCIA RULES, Art. 22.1(d); UNCITRAL Notes on Organizing Arbitration Proceedings, ¶¶ 57-58, at 21; see also LEW ET AL., supra note 3, §§ 22.93, at 579; BORN, supra note 1, at 1902-03; BLACKABY ET AL., supra note 1, § 6.173 et seq., at 411-13. 167 See LEW ET AL., supra note 3, §§ 22.93, at 579. 168 See BORN, supra note 1, at 1891 (“The disclosure and discovery powers of the arbitral tribunal in international arbitration are ordinarily limited to the parties to the arbitration and do not extend to non-parties. This limitation is in substantial part a result of the consensual nature of international arbitration. In principle, the powers conferred by the 576 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24 disclosure power – whether based on the explicit provisions in the parties’ arbitration agreement or arbitral rules incorporated by reference – is naturally limited to the parties of the arbitration, and does not extend to non-parties, even if they are in possession of potentially relevant (and material) information (whether in the form of documents or personal knowledge).169 Thus, most arbitral rules only provide for the tribunal’s disclosure power over the parties.170 This is illustrated by the IBA Rules, which provide that “[i]f a Party wishes to obtain the production of Documents from a person or organization who is not a Party to the arbitration,” the party may ask the tribunal to “take whatever steps are legally available” under national laws to obtain disclosure, or seek leave from the tribunal to do so itself.171 Notably, the tribunal may not itself order disclosure from a non-party. By contrast, a few arbitral rules specifically allow a tribunal to order non- party disclosure.172 Article 11 of the CPR Rules does not expressly limit the
parties’ arbitration agreement (and any institutional rules it incorporates) extend only to the parties to that agreement”); LEW ET AL., supra note 3, § 22.57, at 569 (“Arbitrators have no authority over parties other than those involved directly in the arbitration”); see also Life Receivables Trust v. Syndicate 102 at Lloyd’s of London, 549 F.3d 210, 218 (2d Cir. 2008) (observing that rules ostensibly granting subpoena powers with regard to non- parties are “best seen . . . as nothing more than authorization by the parties – binding only upon the parties – for an arbitrator to order non-party discovery, subject to the willingness of the non-party voluntarily to comply with such order”) (internal quotation omitted); NBC v. Bear Stearns & Co., 165 F.3d 184, 187 (2d Cir. N.Y. 1999) (“If discovery were to be obtained from the Third Parties – none of which was a party to the arbitration agreement at issue here – the authority to compel their participation would have to be found in a source other than the parties’ arbitration agreement”). 169 BORN, supra note 1, at 1891, 1901; BLACKABY ET AL., supra note 1, § 6.17, at 399; AT&T Technologies, Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 648 (1986) (stating that because commercial arbitration is a “matter of contract,” only the parties to the arbitration contract are bound to participate); see also Hay Group, Inc. v. E.B.S. Acquisition Corp., 360 F.3d 404, 406 (3d Cir. 2004). 170 See, e.g., ICDR RULES, Art. 19; ICDR GUIDELINES, Art. 3; ICC RULES, Art. 25(5); LCIA RULES, Art. 22.1(e); UNCITRAL RULES, Art. 27(3); see also BORN, supra note 1, at 1988 n.58. 171 IBA RULES (2010), Art. 3(9). Some countries have taken action to strengthen arbitration procedures by providing legal options for pursuing third-party disclosure not otherwise available under contract law. See, e.g., 9 U.S.C. § 7; French Code of Civil Procedure, Arts. 1467(2), 1506(3) (permitting the tribunal to hear any person, but not providing for subpoena power as to non-parties). Other countries have chosen to leave the power to order non-party disclosure to the courts, either pursuant to a request from the tribunal itself or from the parties with the tribunal’s permission. See, e.g., English Arbitration Act 1996, §43; Swiss Federal Act on Private International Law, Art. 184(2) (1987). 172 See CPR RULES, Art. 11; CPR PROTOCOL, Schedule 1, Modes C and D; see also AAA RULES, Art. 31 (not explicitly limiting the arbitral tribunal’s power to order disclosure to parties to the arbitration). 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 577 tribunal’s disclosure power to parties to the proceedings.173 Indeed, Discovery Mode C (and by analogy D) in Schedule 1 of the CPR Protocol specifically provides for disclosure “of documents relating to issues in the case that are in the possession of persons who are noticed as witnesses by the party requested to provide disclosure,” which includes non-parties to the arbitration.174 Yet, the parties cannot bind third parties through provisions in their arbitration agreement. Thus, while they may provide for the tribunal’s power to order non-party discovery in their arbitration agreement (e.g. by adopting Discovery Modes C or D under the CPR Protocol), and while such provision will be binding upon the parties, enforcement of any non-party disclosure order by the tribunal is ultimately left to the local courts.175 U.S. courts have confirmed that § 7 of the FAA “is the only source of the authority for the validity and enforceability of the arbitrators’ subpoena [over a nonparty].”176
1. Non-Party Witness Testimony and Document Disclosure at a Hearing
Contrary to most national arbitration laws, which limit the tribunal’s authority to parties to the arbitration proceedings, § 7 of the FAA unequivocally provides that a tribunal may order “any person,” including non-parties, to attend a hearing and give evidence in the form of documents or testimony at the hearing.177 The tribunal’s disclosure power over non-parties at a hearing – though unusual compared to other countries – is relatively uncontroversial for tribunals sitting in
173 CPR RULES, Art. 11. 174 CPR PROTOCOL, Schedule 1, Mode C. 175 See, e.g., Life Receivables Trust, 549 F.3d at 218 (holding with regard to Rule 31 of the AAA Rules, which arguably implies subpoena power against parties and non-parties alike, that “its power with regards to non-parties ‘is best seen . . . as nothing more than authorization by the parties – binding only upon the parties – for an arbitrator to order non-party discovery, subject to the willingness of the non-party voluntarily to comply with such order’”). 176 See Hay Group, 360 F.3d at 406; Legion Ins. Co. v. John Hancock Mut. Life Ins. Co. (In re Arbitration), No. 01-162, 2001 U.S. Dist. LEXIS 15911, No. 01-162, at *3 (E.D. Pa. Sept. 5, 2001); see also Integrity Ins. Co., in Liquidation, v. Am. Centennial Ins. Co., 885 F. Supp. 69, 71 (S.D.N.Y. 1995) (“Because the parties to a contract cannot bind nonparties, they certainly cannot grant such authority to an arbitrator. Thus, an arbitrator’s power over nonparties derives solely from the FAA.”). It should be noted that several state arbitration statutes allow arbitrators to require pre-hearing disclosure from non- parties. See, e.g., RUAA, § 17 (allowing arbitrators to permit, but not compel, depositions); Witnesses, oaths and depositions, 42 PA.CONS. STAT. § 7309 (a) (2012) (“The arbitrators may issue subpoenas in the form prescribed by general rules for the attendance of witnesses and for the production of books, records, documents and other evidence.”); see generally Report of the International Commercial Disputes Committee of the Association of the Bar of the City of New York, Obtaining Evidence from Non-Parties in International Arbitration in the United States, 20 AM. REV. INT’L ARB. 421, 442 (2009). 177 9 U.S.C. § 7 (emphasis added). 578 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24 the United States.178 Conversely, where a non-party to the arbitration proceedings refuses to comply with the tribunal’s order, enforcement of the order can raise complex issues.179
2. Non-Party Document Disclosure before a Hearing
U.S. courts are divided as to whether an arbitral tribunal may order a non- party to produce documents before a hearing under § 7. The Sixth and Eighth Circuits as well as several lower federal courts in these and other circuits have held that § 7 of the FAA authorizes arbitral tribunals to order pre-hearing document disclosure from non-parties to the arbitration.180 In Am. Fed. of Television and Radio Artists, AFL-CIO v. WJBK-TV (New World Comm. of Detroit, Inc.),181 the Sixth Circuit noted in dicta that “the subpoena power of an arbitrator under the FAA extends to non-parties,” which “implicitly includes the authority to compel the production of documents for inspection by a party prior to a hearing.”
178 See BORN, supra note 1, at 1892; BLACKABY ET AL., supra note 1, § 6.127, at 399. 179 See infra Sec. III. 180 Sec. Life Ins. Co. of Am. v. Duncanson & Holt, Inc., 228 F.3d 865, 870-71 (8th Cir. 2000); Am. Fed. of Television and Radio Artists, AFL-CIO v. WJBK-TV (New World Comm. of Detroit, Inc.), 164 F.3d 1004, 1009 (6th Cir. 1999) (noting in obiter dicta that subpoena to a non-party for pre-hearing document disclosure may be impliedly permitted by § 7); Stanton v. Paine Webber Jackson & Curtis, Inc., 685 F. Supp. 1241, 1242-43 (S.D. Fla. 1988) (holding that under § 7 of the FAA “arbitrators may order and conduct such discovery as they find necessary” including pre-hearing document production by non-parties); Meadows Indem. Co. v. Nutmeg Ins. Co., 157 F.R.D. 42, 44- 45 (M.D. Tenn. 1993) (holding that “the power of the panel to compel production of documents from third parties for the purpose of a hearing implicitly authorizes the lesser power to compel such documents for arbitration purposes prior to a hearing,” where due to the number of documents the tribunal issued a subpoena “as a method of dealing with complex and voluminous discovery matters in an orderly and efficient manner”); In re Arbitration between Integrity Ins. Co. v. Am. Centennial Ins. Co., 885 F. Supp. 69, 73 (S.D.N.Y 1995) (noting that contrary to depositions “[d]ocuments are only produced once, whether it is at the arbitration or prior to it”); SchlumgergerSema, Inc. v. Xcel Energy, Inc., No. 02-4304, 2004 WL 67647, at *1 (D. Minn. Jan. 9, 2004); In re Meridian Bulk Carriers, Ltd., No. 03-2011, 2003 U.S. Dist. LEXIS 24203, at *4-5 (E.D. La. July 17, 2003); Atmel Corp. v. LM Ericsson Telefon, AB, 371 F. Supp. 2d 402, 403 (S.D.N.Y. 2005); Festus & Helen Stacy Foundation, Inc. v. Merrill Lynch, Pierce Fenner, & Smith Inc., 432 F. Supp. 2d 1375, 1379 (N.D. Ga. 2006); Jas. W. Glover, Ltd. v. Derrick Concrete Cutting & Const., Ltd., 2003 Haw. LEXIS 659, at *3-4, 2003 WL 22970975, at *1 (Haw. Dec. 18, 2003); Amgen Inc. v. Kidney Ctr. of Delaware Cty, Ltd., 879 F. Supp. 878, 881 (N.D. Ill. 1995) (enforcing compliance with a subpoena requiring the pre-hearing document production by a nonparty, where the parties had agreed to arbitrate their dispute pursuant to the Federal Rules of Civil Procedure, which provide for broad discovery). 181 Am. Fed. of Television and Radio Artists, 164 F.3d at 1009 (analogizing a labor arbitrator’s power under § 301 of the Labor Management Relations Act of 1947 to an arbitral tribunal’s power under the FAA, which it did not apply). 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 579
In Security Life Insurance Company of America v. Duncanson & Holt, Inc. (In re Seurity. Life of America), 182 the Eighth Circuit held that an arbitral tribunal has “implicit . . . power to order the production of relevant documents for review by a party prior to the hearing” because “the interest in efficiency is furthered by” it. The court found the requested entity to be “integrally related to the underlying arbitration” because – though not a party to the arbitration proceedings – it had signed the arbitration agreement, and was thus not a third-party.183 On the other hand, the Second, Third and Fourth Circuits as well as lower federal courts in these and other circuits, follow a literal reading of § 7, mandating that non-party document disclosure coincide with the non-party’s attendance at a hearing.184 In COMSAT Corp. v. National Science Foundation, the Fourth Circuit held that “[n]owhere does the FAA grant an arbitrator the authority to . . . demand that non-parties provide the litigating parties with documents during pre-hearing discovery.”185 The court appears to have interpreted the phrase “before them” in
182 In re Arbitration between Sec. Life Ins. Co. of Am., 228 F.3d 865, 870-71 (8th Cir. 2000); but see Hay Group, 360 F.3d at 408-10 (specifically rejecting the Eighth Circuit’s “power-by-implication analysis”). 183 Sec. Life Ins. Co. of Am., 228 F.3d at 871; see also Meadows Indem. Co., 157 F.R.D. at 45 (finding that a tribunal could order pre-hearing disclosure from non-parties to the arbitration proceedings, where they were “intricately related to the parties involved in the arbitration”); but see Life Receivables Trust, 549 F.3d at 217. 184 See, e.g., COMSAT Corp. v. Nat’l Science Found., 190 F.3d 269, 271, 275-76 (4th Cir. 1999) (“The subpoena powers of an arbitrator are limited to those created by the express provisions of the FAA. . . . Nowhere does the FAA grant an arbitrator the authority to . . . demand that non-parties provide the litigating parties with documents during pre-hearing discovery.”); Hay Group, 360 F.3d at 406-07 (“An arbitrator’s authority over parties that are not contractually bound by the arbitration agreement is strictly limited to that granted by the Federal Arbitration Act. . . . Thus, 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.”); Life Receivables Trust, 549 F.3d at 216-17 (“[S]ection 7 of the FAA does not authorize arbitrators to compel pre-hearing document discovery from entities not party to the arbitration proceedings”); Integrity Sys. Co., 885 F. Supp. at 71; Odjfell ASA v. Celanese AG, 328 F. Supp. 2d 505, 507 (S.D.N.Y. 2004) (finding it “particularly inappropriate to subject parties who never agreed to participate in any way [in the arbitration] to the notorious burdens of pre-hearing discovery”); Matria Healthcare, LLC v. Duthie, 584 F. Supp. 2d 1078, 1083 (N.D. Ill. 2008) (noting that in 1925, when the FAA was adopted, the “Federal Rules of Civil Procedure, with their provisions for depositions and other mechanisms for discovery, were more than a decade away” and § 7 of the FAA has not been modified since); Guyden v. Aetna, Inc., No. 3:05-cv-1652, 2006 U.S. Dist. LEXIS 73353, at *19-20 (D. Conn. Sept. 25, 2006), aff’d, 544 F.3d 276 (2d Cir. 2008); Alliance Healthcare Servs. v. Argonaut Private Equity, LLC, 804 F. Supp. 2d 808, 811 (N.D. Ill. 2011); Kennedy v. Am. Express Travel Related Servs. Co., 646 F. Supp. 2d 1342, 1344 (S.D. Fla. 2009); Empire Fin. Group, Inc. v. Penson Fin. Servs, Inc., 2010 WL 742579, at *1 (N.D. Tex. Mar. 3, 2010); Ware v. C.D. Peacock, 2010 WL 1856021, at *3 (N.D. Ill. May 7, 2010); see also City Bar Report, supra note 176, at 425. 185 COMSAT, 190 F.3d at 271, 275. 580 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24
§ 7 of the FAA to require a merits hearing.186 The court reasoned that the parties to an arbitration chose to “forego certain procedural rights attendant to formal litigation in return for a more efficient and cost-effective resolution of their dispute . . . [and a] hallmark of arbitration – and a necessary precursor to its efficient operation – is a limited discovery process.”187 In COMSAT, the court in dicta noted that a party may be able to obtain pre-hearing document disclosure from a non-party upon making a showing of special need or hardship.188 The court did not define “special need,” but noted that “at a minimum, a party must demonstrate that the information it seeks is otherwise unavailable.”189 In Hay Group, Inc. v. E.B.S. Acquisition Corp., the Third Circuit, in an opinion by now U.S. Supreme Court Justice Samuel A. Alito, held that § 7 “unambiguously” provided for non-party document disclosure at a hearing, not “to situations in which the items are simply sent or brought by courier.”190 The court rejected the argument that the tribunal’s power to order pre-hearing document disclosure from non-parties was implied in § 7 based on the provision’s historic background. Section 7 largely mirrors a previous version of Rule 45 of the Federal Rules of Civil Procedure that, before 1991, did not permit federal courts to issue subpoenas to non-parties for pre-hearing document discovery.191 The court noted that such literal reading of § 7 “actually furthers arbitration’s goal of ‘resolving disputes in a timely and cost efficient manner.’”192 Requiring non- party document disclosure at a hearing would “in the long run, discourage the issuance of large-scale subpoenas upon non-parties” because parties would “be forced to consider whether the documents are important enough to justify the time, money, and effort that the subpoenaing parties will be required to expend if an actual appearance before an arbitrator is needed.”193 Allowing pre-hearing document disclosure from non-parties would provide “less incentive to limit the scope of discovery and more incentive to engage in fishing expeditions that undermine some of the advantages of the supposedly shorter and cheaper system of arbitration.”194 The court specifically noted that, while efficiency
186 Id. at 275. 187 Id. at 276. 188 Id. at 271, 276; see also Deiulemar Compagnia di Navigazione SpA v. M/V Allegra, 198 F.3d 473, 479-81 (4th Cir. 1999), cert. denied sub. nom. Pacific Eternity, S.A., v. Deiulemar Compagnia di Navigazione, 529 U.S. 1109 (2000); Gresham v. Norris, 304 F. Supp. 2d 795, 797 (E.D. Va. 2004); Nat’l Union Fire Ins. Co. v. Marsh USA, Inc. (In re Hawaiian Elec. Indus.), No. M-82, 2004 U.S. Dist. LEXIS 12716, at *3 (S.D.N.Y. July 9, 2004). 189 COMSAT, 190 F.3d at 271, 276. 190 Hay Group, 360 F.3d at 407. 191 Id. at 407. 192 Id. at 409. 193 Id. 194 Id. 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 581 considerations may play a role in interpreting § 7, “efficiency is not the principal goal of the FAA.”195 Similarly, in Life Receivables Trust v. Syndicate 102 at Lloyd’s of London, the Second Circuit held that § 7 did not authorize a tribunal to order pre-hearing document disclosure from non-parties.196 The court noted that while “[t]here may be valid reasons to empower arbitrators to subpoena documents from third parties, [the court] must interpret a statute as it is, not as it might be.”197 The court reasoned that this authority granted to the tribunal pursuant to the arbitral rules agreed upon by the parties was “binding only upon the parties.”198 Where the non-party would not voluntarily comply, the court was bound to apply § 7 of the FAA, which – in its opinion – did not allow for pre-hearing disclosure from non- parties.199 To require the presence of a non-party at the hearing “forces the party seeking the non-party discovery – and the arbitrators authorizing it – to consider whether production is truly necessary.”200 Both the Second and Third Circuits have rejected the “special need” exception suggested by COMSAT,201 while New York state courts seem to have adopted it, thus creating a conflict between federal and state courts in New York.202
195 Id. at 410 (citing Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218-19 (1985) (“The legislative history of the Act establishes that the purpose behind its passage was to ensure judicial enforcement of privately made agreements to arbitrate. We therefore reject the suggestion that the overriding goal of the Arbitration Act was to promote the expeditious resolution of claims.”)). 196 Life Receivables Trust, 549 F.3d at 218. 197 Id. at 216. 198 Id. at 218 199 Id. The Second Circuit also noted that pre-hearing disclosure was not available from a non-party to the proceedings, which had signed the arbitration agreement and, thus, was not a third-party. Id. at 217; but see In re Arbitration between Sec. Life Ins. Co. of Am., 228 F.3d at 870-71 (noting that § 7 of the FAA allows a tribunal to order pre-hearing document disclosure of an entity, which though not a party to the arbitration proceedings, had signed the arbitration agreement, and thus was “integrally related to the underlying arbitration”); Meadows Indemn. Co. v. Nutmeg Ins. Co., 157 F.R.D. at 45 (same). However, in such a case, joinder may be appropriate, thus enabling the tribunal to exercise its disclosure power over that entity. Life Receivables Trust, 549 F.3d at 218. 200 Life Receivables Trust, 549 F.3d at 218. 201 Hay Group, 360 F.3d at 410 (finding “no textual basis for allowing any ‘special need’ exception”); Life Receivables Trust, 549 F.3d at 216. 202 ImClone Sys., Inc. v. Waksal, 22 A.D.3d 387, 388 (1st Dep’t 2005) (holding that “depositions of nonparties may be directed in FAA arbitration where there is a showing of ‘special need or hardship’ such as where the information sought is otherwise unavailable”); Connectu, Inc. v. Quinn Emanuel Urquhart Oliver & Hedges, No. 602082/08, Slip Op., at 13 (N.Y. Sup. Ct. Mar. 11, 2010) (“The law in the First Department is that under the FAA a court may compel compliance with arbitrators’ subpoenas for pre-hearing depositions and document discovery if a ‘special need or hardship’ exists”). ImClone, but not Connectu, was decided before the Second Circuit’s decision in Life Receivables Trust to the contrary. In any case, the Second Circuit’s interpretation is not binding on New York state courts. See Flanagan v. Prudential-Bache 582 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24
This split among circuit courts undermines uniformity in the application of the FAA.203 However, unless Congress clarifies the meaning of § 7 of the FAA or the U.S. Supreme Court decides the issue, the split will remain unresolved. Several courts that follow the restrictive interpretation of § 7 of the FAA, precluding tribunals from ordering pre-hearing document disclosure from non- parties, have suggested ways to “bypass” this limitation. The Second Circuit in Life Receivables Trust, quoting Judge Chertoff’s concurring opinion in Hay Group, stated that § 7 “‘does not leave arbitrators powerless’ to order” non-party document production.204 Other courts have held that § 7 does not limit the tribunal’s authority to “merits hearings,” but also allows for special preliminary or procedural hearings, held solely for purposes of document disclosure.205 Some commentators have criticized this.206 In addition, the unambiguous language of
Security, Inc., 67 N.Y.2d 500, 506, 504 N.Y.S.2d 82, cert. denied, 479 U.S. 931 (1986) (“When there is neither decision of the Supreme Court nor uniformity in the decisions of the lower Federal courts . . . a State court required to interpret the Federal statute has the same responsibility as the lower Federal courts and is not precluded from exercising its own judgment or bound to follow the decision of the Federal Circuit Court of Appeals within the territorial boundaries of which it sits . . . .”); see also Imclone Sys., 22 A.D.3d at 388 (“[I]n the absence of a decision of the United States Supreme Court or unanimity among the lower federal courts, we are not precluded from exercising our own judgment on this matter”). 203 While the First, Ninth, Tenth and D.C. Circuits have not yet addressed this issue, there are also conflicting decisions in the lower courts within the Fifth, Seventh and Eleventh Circuits. Compare Empire Fin. Group, Inc. v. Penson Fin. Servs., No. 3:09-cv- 2155, 2010 U.S. Dist. LEXIS 18782, at *2-4 (N.D. Tex. Mar. 3, 2010); Matria Healthcare, LLC v. Duthie, 584 F. Supp. 2d 1078 (N.D. Ill. 2008); Ware v. C.D. Peacock, No. 10 C 2587, 2010 WL 1856021, at *3 (N.D. Ill. May 7, 2010) and Kennedy v. Am. Express Travel Related Servs. Co., 646 F. Supp. 2d 1342, 1344 (S.D. Fla. 2009), with Amgen Inc. v. Kidney Ctr of Delaware Cnty, Ltd., 879 F .Supp. 878 (N.D. Ill. 1995) and Festus & Helen Stacy Found., Inc. v. Merrill Lynch, Pierce Fenner & Smith Inc., 432 F. Supp. 2d 1375, 1379 (N.D. Ga. 2006). 204 Life Receivables Trust, 549 F.3d at 218 (quoting Hay Group, 360 F.3d at 413 (Chertoff, J., concurring)). 205 Stolt-Nielsen SA v. Celanese AG, 430 F.3d 567, 577-79 (2d Cir. 2005) (noting that a preliminary hearing that is not a hearing on the merits “does not transform [the preliminary hearing] into a discovery device,” which would be prohibited, and distinguishing preliminary hearings from depositions); Guyden v. AETNA Inc., No. 3:05cv1652 (WWE), 2006 U.S. Dist. LEXIS, at *20 (D. Conn. 2006); Alliance Healthcare Servs. v. Argonaut Private Equity, LLC, 804 F. Supp. 2d 808, 811 (N.D. Ill. 2011). 206 See, e.g., David A. Siegel, Under Federal Arbitration Act, While Arbitrator Can Subpoena Nonparty as Witness, It Can’t Separately Compel Discovery; What’s N.Y. Rule?, 204 SIEGEL’S PRAC. REV. 2 (2008) (noting that “[e]xtorting a circuitous gambol like that suggests in any event that maybe the federal cases on the other side of the conflict have the better of the argument.”); Lowell Pearson, The Case for Non-Party Discovery under the Federal Arbitration Act, 59 DISP. RES. J. 46, 52 (2004) (“The decisions in Hay and COMSAT invite an absurd subterfuge that is inconsistent with the purpose of arbitration”). 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 583
§ 7 providing that the arbitrators “may summon in writing any person to attend before them or any of them” allows for hearings before a single arbitrator, who may adjourn the proceedings as soon as the non-party appears and produces the requested documents.207 Ultimately, the “inconvenience of making a personal appearance” may lead a non-party to “deliver the documents and waive presence.”208 To ease the burden and costs of such hearings intended mainly to obtain document disclosure from non-parties, some commentators have suggested the use of telephone or video conferencing technology, allowing the hearing participants to “virtually appear” before the tribunal.209 Others have asked for an amendment of § 7 of the FAA to eliminate the requirement of a hearing for production of documents from non-parties.210
3. Non-Party Depositions before a Hearing
Even if a tribunal may order pre-hearing document disclosure of a non-party under § 7 of the FAA, the same is not necessarily true for pre-hearing, non-party depositions. Most U.S. courts confronted with this issue have held that a tribunal does not have the power to order pre-hearing depositions of non-parties under § 7 of the FAA.211 As the U.S. District Court for the Southern District of New York explained:
207 See Hay Group, 360 F.3d at 413; Life Receivables Trust, 549 F.3d at 218; Alliance Healthcare Serv., 804 F. Supp. 2d at 811. 208 Life Receivables Trust, 549 F.3d at 218 (quoting Hay Group, 360 F.3d at 413). 209 See Danielle C. Beasley, Recurring Concerns in Arbitration Proceedings: Examining the Contours of Arbitral Subpoenas Issued to Nonparty Witnesses, 87 U. DET. MERCY L. REV. 315, 330-31 (2010); Charles J. Moxley, Jr., Discovery in Commercial Arbitration: How Arbitrators Think, 63 DISP. RES. J. 36, 42 (2008); but see Hay Group, 360 F.3d at 407 (interpreting the phrase “before them” in § 7 of the FAA to require a non- party witness to “appear in the physical presence of the arbitrator,” which would exclude telephone or videoconferencing). 210 See, e.g., City Bar Report, supra note 176, at 450-52. 211 See Atmel Corp. v. LM Ericsson Telefon, AB, 371 F. Supp. 2d 402, 403 (S.D.N.Y. 2005); Procter and Gamble Co. v. Allianz Ins. Co., No. 02-cv-5480(KMW), 2003 U.S. Dist. LEXIS 26025, at *4 (S.D.N.Y. Dec. 3, 2003); In re Meridian Bulk Carriers, Ltd, No. 03-2011, 2003 U.S. Dist. LEXIS 24203, at *4 (E.D. La. July 17, 2003); Integrity Ins. Co., 885 F. Supp. at 73; Matria Healthcare, LLC v. Duthie, 584 F. Supp. 2d 1078, 1080 (N.D. Ill. 2008); Odjfell ASA v. Celanese AG, 328 F. Supp. 2d 505, 507 (S.D.N.Y. 2004); Kennedy v. Am. Express Travel Related Servs. Co., 646 F. Supp. 2d 1342, 1344 (S.D. Fla. 2009). A limited number of cases have stated in dicta that depositions of non-parties may be available in “unusual circumstances.” See COMSAT, 190 F.3d at 271, 275-76; Nat’l Union Fire Ins. Co. v. Marsh USA, Inc. (In re Hawaiian Elec. Indus.), No. M-82, 2004 U.S. Dist. LEXIS 12716, at *3 (S.D.N.Y. July 9, 2004); ImClone Sys., 22 A.D.3d at 388; Deiulemar Compagnia di Navigazione SpA v. M/V Allegra, 198 F.3d 473 (4th Cir. 1999); Gresham v. Norris, 304 F. Supp. 2d 795, 797 (E.D. Va. 2004). 584 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24
Documents are only produced once, whether it is at the arbitration or prior to it. Common sense encourages the production of documents prior to the hearing so that the parties can familiarize themselves with the content of the documents. Depositions, however, are quite different. The nonparty may be required to appear twice – once for deposition and again at the hearing. That a nonparty may suffer this burden in a litigation is irrelevant; arbitration is not litigation, and the nonparty never consented to be a part of it.212
In addition, because depositions are not held before the tribunal, non-parties may not be protected from harassing or abusive discovery.213 Notably, both the Sixth and the Eighth Circuits declined to reach the issue of a tribunal’s power to order non-party depositions.214 Very few courts have held that a tribunal may order pre-hearing depositions of non-parties under § 7 of the FAA,215 and most of these cases did not concern international arbitration proceedings. In any case, as discussed above, depositions – whether of a party or non-party – are generally considered inappropriate in international arbitration proceedings.216
E. Adverse Inferences
Where a party fails to comply with the tribunal’s order to produce documentary or witness evidence without reasonable excuse, the tribunal may draw adverse inferences against that party.217 The IBA Rules provides that a tribunal may infer that a document or other relevant evidence “would be adverse to the interests” of a party, where the party “without satisfactory explanation” failed to produce it following a request for production to which it did not object or
212 Integrity Ins. Co., 885 F. Supp. at 73; see also In re Meridian Bulk Carriers, Ltd, No. 03-2011, 2003 U.S. Dist. LEXIS 24203, at *4 (E.D. La. July 17, 2003); Procter and Gamble Co. v. Allianz Ins. Co., No. 02-cv-5480(KMW), 2003 U.S. Dist. LEXIS 26025, at *4-5 (S.D.N.Y. Dec. 3, 2003). 213 Integrity Ins. Co., 885 F. Supp. at 73. 214 Am. Fed. of Television and Radio Artists, AFL-CIO v. WJBK-TV (New World Comm. of Detroit, Inc.), 164 F.3d 1004, 1009 n.7 (6th Cir. 1999); Sec. Life Ins. Co. of Am. v. Duncanson & Holt, Inc., 228 F.3d 865, 870-71 (8th Cir. 2000). 215 See Stanton v. Paine Webber Jackson & Curtis, Inc., 685 F. Supp. 1241, 1243 (S.D. Fla. 1988) (holding that § 7 of the FAA does not prohibit pre-hearing witness appearances); Amgen, Inc. v. Kidney Center of Delaware County, 879 F. Supp. 878, 882-83 (N.D. Ill. 1995) (enforcing compliance with a subpoena requiring the deposition of a nonparty, where the parties had agreed to arbitrate their dispute pursuant to the Federal Rules of Civil Procedure, which allow for depositions; In re Security Life Ins. Co. of Am. v. Duncanson & Holt, Inc., 1999 U.S. Dist. LEXIS 23385, at *9 (D. Minn. 1999). 216 See supra at Sec. II(C)(2). 217 BLACKABY ET AL., supra note 1, § 6.129, at 398-99; LEW ET AL., supra note 3, § 22-47, at 566; BORN, supra note 1, at 1919-21. 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 585 an order by the tribunal to produce.218 Tribunals have required additional showings before drawing adverse inferences, such as that the requesting party itself produced material evidence as required, that the requested inference is reasonable, supported by prima facie evidence and consistent with the evidentiary record, and that the non-producing party was aware of the possibility of adverse inferences.219 United States courts recognize a tribunal’s power to draw adverse inferences.220 It is for the tribunal to decide whether an explanation that the requested evidence does not exist, or no longer exists, is satisfactory.221 The tribunal’s adverse inferences should be based on a “reasoned factual analysis” and take into account “the importance of the issues [and] the nature of materials requested and not disclosed.”222 However, one commentator notes that tribunals are “often overly hesitant” to draw adverse inferences, which can lead to a denial of justice.223
218 IBA RULES (2010), Art. 9.5, 9.6; see also ICDR GUIDELINES, §8(b); UNCITRAL MODEL LAW, Art. 25(c). 219 BORN, supra note 1, at 1920. 220 See, e.g., Nat’l Cas. Co. v. First State Ins. Group, 430 F.3d 492, 497-99 (1st Cir. 2005) (“Here, one party was offered a choice between producing documents or having to contend with an inference about their content. This, as we have just discussed, was a choice that was within the arbitrator’s power to offer.”); Life Receivables Trust, 549 F.3d at 217 (stating that “[a]n arbitrator can enforce his or her discovery order through, among other things, drawing a negative inference from a party’s refusal to produce . . . .”); In re Application by Rhodianyl S.A.S, No. 11-1026-JTM, 2011 U.S. Dist. LEXIS 72918, at *51 (D. Kan. Mar. 25, 2011) (finding adverse inferences to be effective remedies for violations of discovery orders); AmeriCredit Fin. Servs. v. Oxford Mgmt. Servs., 627 F. Supp. 2d 85, 101 (E.D.N.Y. 2008) (concluding that adverse inferences concern the weight the arbitrator accorded the evidence and are thus not grounds for vacatur of the award); Norfolk & W. Ry. v. Transp. Commc’n Int’l Union, 17 F.3d 696, 701 (4th Cir. 1994) (noting that the arbitration board’s power to draw adverse inferences “could reasonably be understood as implicit in the powers expressly conferred upon it by the parties”); see also generally Forsythe Int’l, S.A. v. Gibbs Oil Co., 915 F.2d 1017, 1023 n.8 (5th Cir. 1990) (“Arbitrators may, for example, devise appropriate sanctions for abuse of the arbitration process”); Interchem Asia 2000 PTE Ltd. v. Oceana Petrochemicals AG, 373 F. Supp. 2d 340, 352 (S.D.N.Y 2005) (“The handling of procedure during an arbitration is committed to the discretion of the arbitrator”); Warner Barnes & Co. v. Kokosai Kisen Kabushiki Kaisha, 102 F.2d 450, 453 (2d Cir. 1939) (“When a party is once found to be fabricating, or suppressing, documents, the natural, indeed the inevitable, conclusion is that he has something to conceal, and is conscious of guilt”). 221 BLACKABY ET AL., supra note 1, § 6.130, at 400 (noting that the explanation that a document was destroyed pursuant to a well-established corporate document retention policy before the dispute arose would likely be satisfactory). 222 BORN, supra note 1, at 1920 n.205 (noting that a tribunal should not exercise punishment by drawing adverse “punitive inferences”). 223 Id. at 1920. 586 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24
Alternatively, the tribunal may impose sanctions against the non-compliant party by awarding costs and legal fees to the opposing party or seek judicial enforcement of its disclosure orders in the local courts.
III. JUDICIAL ASSISTANCE
Most disclosure in international arbitration proceedings occurs within the context of the arbitration and under the control of the tribunal.224 However, the tribunal and the parties may seek judicial assistance in accordance with national laws in obtaining disclosure.225 This may be particularly likely where disclosure is sought from third parties.
A. Judicial Assistance to the Tribunal in Enforcing a Disclosure Order
In the United States, courts may provide judicial assistance to the tribunal in enforcing a disclosure order.226 Section 7 of the FAA provides as follows:
Said summons shall issue in the name of the arbitrator or arbitrators, or a majority of them, and shall be signed by the arbitrators, or a majority of them, and shall be directed to the said person and shall be served in the same manner as subpoenas to appear and testify before the court; if any person or persons so summoned to testify shall refuse or neglect to obey said summons, upon petition the United States district court for the district in which such arbitrators, or a majority of them, are sitting may compel the attendance of such person or persons before said arbitrator or arbitrators, or punish said person or persons for contempt in the same manner provided by law for securing the attendance of witnesses or their punishment for neglect or refusal to attend in the courts of the United States.227
Thus, § 7 of the FAA established two procedural limitations for a tribunal’s disclosure order: (1) the arbitrator’s subpoena must be “served in the same manner as subpoenas to appear and testify before court,” and (2) only the federal district court for the district, “in which such arbitrators, or a majority of them, are sitting,” may assist with enforcing it.228 These limitations are interrelated as both
224 Id. at 1922-23. 225 Id. at 1923. 226 Such order can take the form of an interim or partial award or a mere procedural order. See LEW ET AL., supra note 3, § 22-53, at 568. While partial awards are generally enforceable under the New York Convention, a tribunal’s procedural order is not normally enforceable. Id. § 22-58, at 569; see also Publicis v. True North Commc’ns Inc., 206 F.3d 725, 728-29 (7th Cir. 2000) (noting that courts do not have the authority to enforce a tribunal’s procedural order, but that in this case the tribunal had issued a final order subject to judicial confirmation). Either the subpoenaed (non-party) witness or the other party on behalf of that witness may file a motion to quash the subpoena or arbitral order. However, the subpoenaed party is under no obligation to move to quash a subpoena to preserve its rights to object to it. COMSAT, 190 F.3d at 271, 276. 227 9 U.S.C. § 7. 228 Id. 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 587 the service and enforcement of subpoenas by federal courts are governed by Rule 45 of the Federal Rules of Civil Procedure, which was amended effective December 1, 2013, which thus in turn governs the service and enforcement of a tribunal’s disclosure order.229 Under Rule 45(b)(2), a subpoena may now be served “at any place within the United States.” However, under amended Rule 45(c)(1), a subpoena may only compel a person to a attend a hearing, trial or deposition within 100 miles of the location where the subpoenaed person resides, is employed, or regularly transacts business in person.230 Thus, a subpoena issued by a tribunal sitting in New York to a third-party witness residing in California ordering her appearance at a hearing in New York to provide testimony and documents may now be validly served and no longer faces any issues with the prior geographical limitations. In addition, § 7 of the FAA mandates that it is for the district court where the “arbitrators, or a majority of them, are sitting” to enforce the tribunal’s subpoena. Several courts had recognized that § 7 of the FAA, read in conjunction with the prior Rule 45 of the Federal Rules of Civil Procedure, left an “enforcement gap,” but considered that it is not for the courts (but for Congress) to fill it.231 Yet, to “bypass” this gap some courts have suggested holding a special “document production hearing” with the majority of the arbitrators at the non-party’s place of residence location or document location to issue and enforce the subpoena for the (sole) purpose of obtaining testimony and documents from a witness who would not otherwise be subject to the subpoena at the arbitral seat specified in the arbitration agreement.232 However, relocating the hearing may be a time-
229 Legion Ins. Co. v. John Hancock Mut. Life Ins. Co., 33 Fed. Appx. 26, 27-28 (3d Cir. 2002); Dynegy Midstream Servs., LP v. Trammochem, 451 F.3d 89, 94-95 (2d Cir. 2006); Alliance Healthcare Servs. v. Argonaut Private Equity, LLC, 804 F. Supp. 2d 808, 813 (N.D. Ill. 2011). 230 Fed. R. Civ. P. 45(c)(1)(A). Rule 45(a)(2) also provides that a subpoena must be issued from the district court where the action is pending. 231 See, e.g., Alliance Healthcare Servs., 804 F. Supp. 2d at 813 (refusing to enforce subpoena issued by tribunal seated in Chicago for production of document and attendance at hearing in San Francisco); Dynega Midstream Servs., LP v. Trammochem, 451 F.3d 89, 96 (2d Cir. 2006) (finding “no reason to . . . close a gap that may reflect an intentional choice on the part of Congress, which could well have desired to limit the issuance and enforcement of arbitration subpoenas in order to protect non-parties from having to participate in an arbitration to a greater extent than they would if the dispute had been filed in a court of law”); Hunter Eng’g Co. v. Hennessy Indus., No. 4:08 CV 465 DDN, 2009 U.S. Dist. LEXIS 105497, at *5 (E.D. Mo. Nov. 12, 2009) (finding that based on the plain language of § 7 of the FAA, plaintiff must seek enforcement of the arbitrator-issued subpoena in the district where the arbitrator is sitting); see also Legion Ins. Co., 33 Fed. Appx. at 27-28 (holding that a district court in Pennsylvania cannot enforce an arbitration subpoena directed to a non-party in Florida). 232 See, e.g., Seaton Ins. Co. v. Cavell USA, No. 3:07-cv-356, at *5-6 (D. Conn. Mar. 21, 2007) (holding that there was not any statute or rule preventing the parties from “mutually agreeing to move the arbitration to a location other than the one designated in an arbitration agreement, even when the sole reason for doing so is to obtain testimony 588 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24 consuming and costly task, and may be met with resistance from the opposing party.233 Other courts held that the prior territorial limits of service of process and thus personal jurisdiction did not apply to the enforcement of a subpoena under the FAA.234 Finally, at least one court235 read § 7 of the FAA and prior Rule 45 of the Federal Rules of Civil Procedure in a way that “plugged the gap.”236 In Amgen v. Kidney Center of Delaware County,237 the federal court for the Northern District of Illinois held that where the parties had adopted “liberal discovery” by agreeing to arbitrate under the Federal Rules of Civil Procedure, nationwide service was available since the court at the place of the deposition sought (here Pennsylvania) could “enforce a subpoena issued by Amgen’s attorney [under Rule 45(a)(3)(B)] with the name and number of a case pending” before the court at the seat of arbitration (here Illinois). This “compromise position” was rejected by the Second Circuit and a subsequent decision of the Northern District of Illinois because § 7
and documents from witnesses who would not be subject to subpoenas in the contractually designated location”); In re Nat’l Fin. Partners Corp., No. 09-mc-0027, 2009 U.S. Dist. LEXIS 34440, at *2 (E.D. Pa. Apr. 21, 2009) (refusing to quash subpoena issued by arbitral tribunal in Pennsylvania requiring testimony and the production of documents from a non-party at a pre-merits hearing in Florida); see also Danielle C. Beasley, Recurring Concerns in Arbitration Proceedings: Examining the Contours of Arbitral Subpoenas Issued to Nonparty Witnesses, 87 U. DET. MERCY L. REV. 315, 329 (2010); Leslie Trager, The Use of Subpoenas in Arbitration, 62 DISP. RESOL. J. 14, 17 (2008); Teresa Snider, The Discovery Powers of Arbitrators and Federal Courts under the Federal Arbitration Act, 34 TORT & INS. L.J. 101, 101 (1998); Paul D. Friedland & Lucy Martinez, Arbitral Subpoenas Under U.S. Law and Practice, 14 AM. REV. INT’L ARB. 197, 227 (2003); Robert W. DiUbaldo, Evolving Issues in Reinsurance Disputes: The Power of Arbitrators, 35 FORDHAM URB. L.J. 83, 99 (2008). It is not uncommon for international arbitration for hearings to be held at a location other than the place of arbitration provided for in the parties’ agreement. 233 City Bar Report, supra note 176, at 455; Teresa Snider, supra note 232, at 101 (1998). 234 See e.g., SchlumgergerSema, Inc. v. Xcel Energy, Inc., 2004 WL 67647, at *2 (D. Minn. Jan. 9, 2004) (holding that “a subpoena for the production of documents need not comply with ‘Rule 45(b)(2)’s territorial limit because the burden of producing documents need not increase appreciably with an increase in the distance those documents must travel’” and ordering document production in New York pursuant to subpoena issued in arbitration proceedings in Minnesota); Sec. Life Ins. Co. of Am. v. Duncanson & Holt, Inc., 228 F.3d 865, 872 (8th Cir. 2000); Festus & Helen Stacy Foundation, Inc. v. Merrill Lynch, Pierce Fenner, & Smith Inc., 432 F. Supp. 2d 1375, 1379 (N.D. Ga. 2006); see also Hay Group, 360 F.3d at 413 (holding in dicta that the personal jurisdiction argument is “unconvincing”); Lisa M. Eddington & Howard S. Suskin, Enforcing Third-Party Discovery in Arbitration, 37(2) LIT. NEWS 2 (2012). 235 Amgen, Inc. v. Kidney Ctr. of Delaware Cty, 879 F. Supp. 878, 883 (N.D. Ill. 1995). 236 Alliance Healthcare Servs., 804 F. Supp. 2d at 812. 237 Amgen, 879 F. Supp. at 882-83. 2013] OBTAINING AND SUBMITTING EVIDENCE IN INT’L ARBITRATION IN THE U.S. 589 of the FAA only refers to the issuance of subpoenas “in the name of arbitrators,” not counsel.238 The new Rule 45 assumes that a subpoena can be validly served nationwide, but it has not really addressed the enforcement gap.
B. Judicial Assistance to a Party in Taking Evidence
Section 7 of the FAA also allows parties to an arbitration to seek judicial assistance in taking evidence without the approval or involvement of the tribunal.239 This makes § 7 the principal exception to the common approach that only the tribunal, or a party with leave from the tribunal, may seek judicial assistance with disclosure.240 Most courts have required a showing of “exceptional circumstances” in order to grant a party’s request for judicial assistance with evidence taking.241 A party will have to show a compelling need
238 Dynegy Midstream Servs., LP v. Trammochem, 451 F.3d 89, 96 (2d Cir. 2006); Alliance Healthcare, 804 F. Supp. 2d at 813. 239 BORN, supra note 1, at 1929. 240 See, e.g., IBA RULES (2010), Art. 3(9) (“If a Party wishes to obtain the production of Documents from a person or organization who is not a Party to the arbitration and from whom the Party cannot obtain the Documents on its own, the Party may, within the time ordered by the Arbitral Tribunal, ask it to take whatever steps are legally available [under national law] to obtain the requested Documents, or seek leave from the Arbitral Tribunal to take such steps itself.”). 241 See, e.g., In re Compania Chilena de Navegacion Interoceanica S.A., No. 03 CV 5382 (ERK), 2004 U.S. Dist. LEXIS 6408, at *9 (E.D.N.Y. Jan. 29, 2004) (finding that “extraordinary circumstances” justified a court order preserving evidence despite the existence of an arbitration agreement); In re Deiulemar Compagnia di Navigazione SpA v. M/V Allegra, 198 F.3d 473, 479-81 (4th Cir. 1999) (requiring “extraordinary circumstances” before permitting court-ordered pre-hearing discovery); COMSAT Corp. v. Nat’l Science Found., 190 F.3d 269, 277 (4th Cir. 1999) (“A federal court may not compel a third party to comply with an arbitrator’s subpoena for prehearing discovery, absent a showing of special need or hardship”); Koch Fuel Int’l Inc. v. M/V South Star, 118 F.R.D. 318, 320 (E.D.N.Y. 1987) (finding “exceptional circumstances” and allowing for prehearing discovery “where a vessel with crew members possessing particular knowledge about the dispute is about to leave port”); Vespe Contracting Co. v. Anvan Corp., 399 F. Supp. 516, 522 (E.D. Pa. 1975) (granting judicial assistance where continuing work on construction project would effectively destroy evidence); Bergen Shipping Co. v. Japan Marine Servs., Ltd, 386 F. Supp. 430, 435 n.8 (S.D.N.Y. 1974); see also BORN, supra note 1, at 1930; Friedland & Martinez, supra note 232, at 205-06. Notably, New York law contains a provision on preliminary relief in aid of arbitration, under which a party may seek the disclosure of evidence necessary to support or oppose an application for interim relief. N.Y. C.P.L.R. § 3102(c). New York courts generally require a showing of exceptional circumstances to grant such disclosure. See, e.g., Guilford Mills, Inc. v. Rice Pudding, Ltd., 90 A.D.2d 468, 468 (1st Dep’t 1982); Motor Vehicle Accident Indemnification Corp. v. McCabe, 19 A.D.2d 349, 352 (1st Dep’t 1963) (declining discovery in aid of arbitration because appellant had failed to show extraordinary circumstances); see also David D. Siegel, Under Federal Arbitration Act, 590 THE AMERICAN REVIEW OF INTERNATIONAL ARBITRATION [Vol. 24 for the evidence sought that would otherwise be unavailable and that the tribunal is not yet constituted or unable to obtain the evidence itself.242 Other courts have been less demanding, but emphasized that court-ordered disclosure should not delay the arbitration proceedings.243 A significant number of federal and state courts have refused requests for court-ordered disclosure at the request of a party.244
IV. CONCLUSION
International arbitration in the United States under § 7 of the FAA offers some unique features for the taking of evidence unknown in most other jurisdictions, such as the tribunal’s subpoena power over non-parties to the arbitration. Even within the United States, the availability and breath of disclosure that a tribunal may order as well as the assistance in evidence-gathering by a national court may depend on the location of the tribunal. Thus, when drafting an arbitration agreement providing for an arbitral seat in the United States, the parties should carefully consider the likely locations of prospective witnesses or documents.
While Arbitrator Can Subpoena Nonparty as Witness, It Can’t Separately Compel Discovery; What’s N.Y. Rule?, 204 SIEGEL’S PRAC. REV. 2 (2008). 242 See, e.g., In re Compania Chilena de Navegacion Interoceanica S.A., No. 03 CV 5382 (ERK), 2004 U.S. Dist. LEXIS 6408, at *9 (E.D.N.Y. Jan. 29, 2004); Vespe Contracting Co. v. Anvan Corp., 399 F. Supp. 516, 522 (E.D. Pa. 1975) (retaining jurisdiction and permitting pretrial discovery to continue until parties have chosen arbitrator or arbitral panel); see also BORN, supra note 1, at 1930-3 (noting that these decisions are “best understood as forms of court-ordered provisional measures in aid of arbitration”). 243 See, e.g., Int’l Ass’n of Heat and Frost Insulators and Asbestos Workers v. Leona Lee Corp., 434 F.2d 192, 194 (5th Cir. 1970) (apparently not requiring any showing of exceptional circumstances); Bigge Crane & Rigging Co. v. Docutel Corp., 371 F. Supp. 240, 243-244 (E.D.N.Y. 1973) (focusing primarily on the size of the claim, the low cost of court-ordered discovery and the absence of any showing that arbitration would be delayed); but see BORN, supra note 1, at 1930-32 (cautioning that judicial assistance in the taking of evidence at the request of a party without leave from the tribunal may run counter to the parties’ agreement to resolve all disputes exclusively by arbitration). 244 See, e.g., Nat’l Broadcasting Co. v. Bear Stearns & Co., 165 F.3d 184, 191 (2d Cir. 1999) (noting that § 7 of the FAA was consistent with the traditionally very limited discovery available in international arbitration); Suarez-Valdez v. Shearson/American Express, Inc., 858 F.2d 648, 649 (11th Cir. 1988); Burton v. Bush, 614 F.2d 389, 390 (4th Cir. 1980) (“While an arbitration panel may subpoena documents or witnesses, the litigating parties have no comparable privilege”); H.K. Porter Co., etc. v. United Steelworkers of Am., 400 F.2d 691, 695-96 (4th Cir. 1968); Lummus Co. v. Commonwealth Oil Ref. Co., 273 F.2d 613, 614 (1st Cir. 1959) (finding right to discovery in arbitration “far more restricted” than in federal litigation); Hires Parts Service, Inc. v. NCR Corp., 859 F. Supp. 349, 355 (N.D. Ind. 1994) (“[P]ermitting discovery on two levels, district court level and arbitration level, is a great waste of resources and frustrates the basic purpose of [the FAA]”).