Disclosure and production in arbitration: finding the right framework

This article was first published in the Practical Law Arbitration Blog

Finding the framework

A great attraction of arbitration is that parties have the choice not to litigate their disputes under the document disclosure/production regimes of a particular domestic court. Instead, they can agree (or empower an arbitrator to select) the process. In contrast to processes they are used to, the regime chosen might be narrower in scope (and so quicker and cheaper), or more extensive (with the potential to give them greater access to documents that their opponents control).

Which process should be advocated or selected? In the end, the usual unhelpful if accurate principle applies: it depends on the circumstances of the relationship in play or the dispute that might be anticipated (or already has arisen).

That said, there are some key factors that will inform what framework has to, or should sensibly, be deployed. While the thoughts below are geared towards a situation where parties/their advisors and tribunals are confronted with a choice of the process to advocate or adopt, such thoughts can and should be borne in mind too when parties are negotiating the terms of an arbitration agreement before a dispute has arisen.

Background: different jurisdictions, different approaches

Arbitration often generates a confluence of parties, advisors or tribunal members from different jurisdictions and legal traditions. They often have differing experiences and expectations of what a disclosure/production process should comprise.

Those from common law jurisdictions may well be used to a far reaching process, where parties are required to disclose and supply a wide range of helpful and harmful materials (along the lines of Peruvian Guano or CPR “standard disclosure”). Those with a civil law background are more likely to be used to a limited disclosure process (if there is one at all) and a production process marked by the selective provision of helpful documents. Among the many pros and cons of each, the former can lead to a disproportionately costly and time consuming process but can sometimes unearth the “smoking gun”. The latter is cheaper and quicker but might allow parties to withhold material harmful to their case and obstruct the fair resolution of the dispute.

This mixture has promoted and continues to generate a fertile exchange of ideas about best approaches to the process. Institutional rules of arbitration and evidence have developed and been published which aim to tread a line between those different traditions, while promoting the fair and efficient settlement of disputes in a time and cost effective manner.

A review of these different approaches filters helpfully into any decision making process about the most suitable disclosure/production regime.

Identifying the legal framework

Local laws

Obvious as it may be, the starting point will be a review of the provisions of the local arbitration laws that regulate procedural matters. Usually the laws of the seat may limit or delineate the disclosure or production processes that can be used.

Generally, but there will be local differences, where the law is based on the UNCITRAL Model Law on International Commercial Litigation as amended (as in this jurisdiction, with the Arbitration Act 1996), those laws tend to be permissive and look to give effect to any agreement on the topic.

Absent any agreement, the laws usually provide that the tribunal has a broad discretion to select the process, subject only to overriding duties to ensure procedural fairness (such as section 33 of the 1996 Act).

Terms of the parties’ agreement

The terms of the agreement to arbitrate are key. In particular, parties may already have made express provision for the disclosure/production process.

It may be they have already agreed that a particular evidential process is to be followed, for example, the framework set out in the IBA Rules on the Taking of Evidence in International Arbitration, as adopted on 29th May 2010 (the IBA Rules, discussed below).

Commonly agreed institutional rules and disclosure/production

As we know, parties will often have agreed, further or instead, that proceedings will be conducted under a set of arbitration rules. Those could be the arbitration rules of a trade body, or of an international arbitration institution like the ICC Rules of Arbitration (ICC Rules) or the LCIA Arbitration Rules 2014 (LCIA Rules).

The ICC and LCIA Rules, like many, confirm that a tribunal will have a broad discretion to settle any disclosure/production process. They also emphasise that any arbitration should be conducted in an expeditious and cost effective manner. Many seasoned tribunals and commentators seem to feel that, in many cases, a far reaching, time and cost intensive common law disclosure process rarely achieves that end.

On that note, the ICC Rules recommend (see Article 24(1) and Appendix IV) that parties and tribunals give careful consideration to a disclosure/production process that tends away from a common law regime to one where parties produce those documents on which they rely, with a carefully policed right to request the production of particular documents from opposing parties.

What regime to advocate/choose?

Guidance

So, it may be that the local arbitration laws or the parties’ pre-existing agreement have already set the regime.

If not, or thanks to the tribunal’s discretion, further submissions and decisions need nevertheless to be made. There are then different approaches and related commentary to bear in mind. As part of any analysis, the nature and number of potentially relevant electronic documents will need to be taken into account.

Sources include:

• The procedural rules of domestic courts and related commentary, for example, CPR 31 and its related practice directions. Thanks to recent amendments to CPR 31 (CPR 31.5(7) on disclosure), a number of disclosure/production solutions are set out there for review. One of those is, of course, the CPR “standard disclosure” and inspection processes.
• Rules of evidence that consciously blend the approaches of different legal traditions. The IBA Rules are the best known example. Put briefly, the starting position for disclosure/production under them is that parties will adduce the documents on which they intend to rely, and have a right to request the production of documents/classes of documents from adversaries (bounded by limiting criteria like relevance and materiality).
• Commentary and guidance generated by international arbitration bodies, like the ICC and Chartered Institute of Arbitrators. Relevant publications include the ICC Commission Report on Techniques for Controlling Time and Costs in Arbitration, Appendix IV of the ICC Rules, the ICC Arbitration Commission Report on Managing E-Document Production, and the Chartered Institute for Arbitrators, with the Protocol for E-Disclosure in Arbitration.

Practical concerns

Tying threads together, sensible questions to consider will include:

• Are there budgetary concerns: do some or all of the parties wish to avoid the time and cost associated with a common law disclosure/production process?
• Where parties hail from different jurisdictions, would adopting an “internationalist approach”, such as the IBA Rules, be a helpful point of compromise between disputes arising from different expectations of how the process should run?
• What is the likely time and cost/benefit outcome of different approaches? As part of that analysis:
  • what are the sums in dispute and what are the claims/arguments that have arisen?
  • how document heavy (in hard copy and electronically stored information), and time and cost intensive, would differing approaches to disclosure/production be?
  • do the parties already have many documents in common, thanks to previous dealings or pre-action exchanges?
  • if a particular regime is selected, will it satisfy the tribunal’s statutory/contractual obligations to act fairly and impartially between the parties and to adopt procedures suitable to the circumstances of the case?

To that end, in a low value dispute over unpaid invoices, it may well be that a streamlined regime along the lines of the IBA Rules would be more proportionate and appropriate than one akin to a CPR “standard disclosure” with inspection exercise. In a high value dispute, for example, with allegations of deceit and the forgery/fabrication of documentation, a regime based on the IBA Rules but with provision for extensive document production or a disclosure regime akin to standard disclosure with inspection may be appropriate.