Disclosure Obligations and the Extent of a Tribunal's Discretion in International Arbitration
Courts across the world have very different approaches to procedural matters such as disclosure. The differences are particularly strong between common law and civil law jurisdictions. In civil law jurisdictions such as France, Germany or Qatar, parties are usually required to disclose only the documents they rely on (and importantly, not those they don't wish the other side to see).
In contrast, common law jurisdictions such as Australia, the United States or England and Wales usually require parties to disclose all the documents that are material to the dispute, including documents adverse to the disclosing party's interest.
The approach to disclosure in international arbitration is usually somewhat a hybrid. While parties can usually adopt the rules that fit their particular circumstances, parties to commercial disputes often adopt sets of rules which are increasingly harmonised.
Arbitration is a consensual process and, accordingly, parties have usually an almost unfettered discretion in choosing the applicable procedural rules. However, because of the adverse nature of international arbitration, the parties' discretion is often surrendered to the tribunal.
Applicable Rules
What procedural rules apply in an international arbitration will depend on:
- the lex arbitri or law of the seat of the arbitration;
- orders of the arbitral tribunal;
- the institutional and other rules adopted by the parties; and
- any other agreements between the parties.
The arbitral tribunal has usually wide discretion with regards to disclosure, subject to any agreement between the parties and mandatory rules of the lex arbitri.
The lex arbitri's influence on disclosure is usually limited to imposing duties the tribunal needs to comply with when deciding on procedural matters such as disclosure. For instance, the English Arbitration Act 1996 provides:
"(1) The tribunal shall—
(a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, and
(b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined.
(2) The tribunal shall comply with that general duty in conducting the arbitral proceedings, in its decisions on matters of procedure and evidence and in the exercise of all other powers conferred on it."
Most arbitral institution rules such as the ICC Rules of Arbitration or the LCIA Arbitration Rules will contain similar provisions regarding the tribunal's duties. They may also allow the tribunal to order the parties to disclose certain documents. However, they seldom go further than that.
The IBA Rules and the Tribunal's Discretion
While the parties and the tribunal may agree bespoke rules in relation to disclosure, the IBA Rules on the Taking of Evidence in International Arbitration (the "IBA Rules") are often adopted or used as guidelines in commercial arbitrations.
The IBA Rules provide a comprehensive set of rules in relation to disclosure, with elements from both civil law and common law jurisdictions. As in civil law jurisdictions, they require parties to disclose all the documents they rely on. However, they also allow the parties to submit requests to the other party for narrow and specific categories of documents which are in that party's "possession, custody or control" and which are "relevant to the case and material to its outcome".
Such requests can be resisted by the other party on a number of grounds such as the request being too wide, the documents being immaterial to the outcome of the case or legal impediment such as privilege. When such objections are raised, it is for the tribunal to decide on their validity. Subject to its general duty, the tribunal has wide discretion to decide whether a request is too wide, or the documents material or protected by privilege. Again, subject to its general duty and taking into account a number of factors set out in the IBA Rules, the tribunal has the discretion to choose what privilege rules apply.
Failure to comply with the tribunal's disclosure orders can result in the tribunal drawing adverse inferences. However, tribunals will generally opt to draw adverse inferences only as a last resort and will usually give the breaching party opportunity to remedy the breach first. Depending on the lex arbitri, a party may also seek a court order requiring the breaching party to comply with the tribunal's order.
When the IBA Rules are used as guidelines, the parties preserve the ability to derogate from the rules, by mutual consent. However, in reality parties will rarely agree on disclosure issues. Parties from different jurisdictions will have different expectations of what their disclosure obligations should be. In addition, tactically, parties will often have diverging views as to what they would like their obligations to be. Consequently, the tribunal usually retains significant discretion in relation to matters of disclosure.
Different tribunals may have different readings of the IBA rules and derogate from them in certain circumstances. If the arbitrators are from a common law background, they may take a more investigative approach to disclosure. If they are from civil law backgrounds, they may take a lighter approach.
Equally, the subject matter and particular circumstances of the dispute will influence the tribunal's approach to disclosure. Self-contained commercial contractual interpretation cases will generally require relatively little documentation. In contrast, construction delay disputes for example require a wide disclosure of contemporaneous documents in order to properly investigate the issues that have caused delay throughout the project. Making the appropriate orders is necessary for the tribunal to discharge its general duty.
Conclusion
Additionally, whilst the IBA Rules provide for the opportunity for parties to obtain orders that documents be disclosed which go further than just those documents which the other side want the tribunal to see, where arbitral panels lack the compulsive powers of a court, many parties invariably fail to disclose documents which are damaging to their case, and this is a slight weakness of arbitration when compared to (at least common law) litigation, where a failure to disclose, or hiding documents, has very serious consequences for a party and their counsel. A strong arbitral panel can address some of these concerns, but ultimately without severe court style sanctions many litigants will (and routinely do) fail to fully comply with their disclosure obligations for tactical reasons. This places an unnecessary cost burden on the innocent party, whom then has to work doubly hard to construct their case when the smoking gun sits only metres away across the bar table, never to be seen.
With these risks in mind it is essential that at the outset of any arbitration, parties give careful consideration as to whom they wish to appoint as arbitrator, taking into account the specificities of the dispute and their disclosure strategy. Whilst a good arbitrator may not be necessarily able to make a party disclose the smoking gun, an experienced one may smell the smoke.
James Bremen is a partner in Herbert Smith Freehills' London and Doha offices. He has practised exclusively in construction law for almost twenty years. He has been ranked Tier One in construction, energy and projects by Chambers Global for the past three years and is widely recognised as one of MENA's pre-eminent construction lawyers (MEED, Superlawyers 2013, IFLR, World's leading construction lawyers 2012, Chambers Global 2014/15/16).
He has significant experience in dispute resolution and project development, both in the Kingdom of Saudi Arabia and internationally. He is a trusted advisor on construction matters for a number of GCC governments, in particular the Kingdom of Saudi Arabia and the State of Qatar.
James can be contacted on +44 20 7466 2884 or by email at james.bremen@hsf.com
Leith Ben Ammar is an associate in Herbert Smith Freehills' London office. He has experience advising clients on various aspects of dispute resolution (including arbitration, litigation and mediation) and construction law, both in the United Kingdom and internationally.
He has advised contractors, public bodies, multinational companies and developers in various industry sectors, including construction, energy, mining, infrastructure and transport. Leith speaks fluent English and French, and colloquial Arabic.
Leith can be contacted on +44 20 7466 2578 or by email Leith.BenAmmar@hsf.com
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