Part XIV Final Reflections and Looking Ahead, 37 Recollections of Past Events and Reflections on Future Trends
From: Defining Issues in International Arbitration: Celebrating 100 Years of the Chartered Institute of Arbitrators
Edited By: Julio César Betancourt
- Jurisdiction — Arbitral tribunals — Arbitrators
37.01 I do not ordinarily write for publication using the ‘first person singular’. However, for this liber amicorum, which marks the CIArb’s special anniversary, I was invited by the editor to include recollections of my personal experiences involving the Institute and, more generally, the world of arbitration. When I started to prepare this commentary I tried to write in the usual ‘third person’, but the text soon became extraordinarily ponderous and I therefore abandoned the attempt.
37.02 I do not recall precisely when I became a member of the Institute, but it would have been approximately 50 years ago, in the mid 1960s, soon after I qualified as a solicitor in 1964 and joined the corporate department of the firm in which I was working. One afternoon, the senior partner called me and requested me to come to his office. When I got there, Alan Redfern, who was the first (and only) litigation partner in the firm at the time, was with him. The senior partner, Sir Charles Whishaw, explained that the firm had recently been instructed in two major international arbitrations involving foreign governments (Sudan and Kuwait)—one as claimant and the other as respondent.
37.03 Sir Charles said that Alan’s primary duty was to manage the firm’s (quite new) litigation department and, while Alan would be working on the cases himself, he would need a recently qualified assistant to help gather the evidence, etc, on a temporary ‘secondment’ basis until the cases were completed. I was the most recently qualified solicitor in the firm, and my desk was relatively clear. Would I be willing to be assigned to the task? My reply was, naturally, ‘Of course, Sir Charles, I will be happy to do whatever the firm would like me to do’. He thanked me courteously, and indicated that Alan would brief me on the details of the assignment later.
37.04 As I was leaving the room, I stopped, turned back to face Sir Charles, and asked him how long my secondment to Alan’s department was expected to last. He replied, ‘I am afraid I don’t know, I will have to ask Alan to answer that question’. Alan said, ‘I don’t know either, but my guess is that it will be not less than six months, and not more than one year’. (p. 444) I recounted this story 30 years later, in 1994, in the remarks I made during my ‘retirement speech’ to the Litigation Department—by which time I had worked at the firm for 33 years; been a litigation partner for 27 years; and had become the founder and first head of the International Arbitration Group within the department, while Alan continued to be its leader (and managing partner) within the firm’s overall governance structure.
37.05 I do not now recall, but I think I joined the Institute soon after my ‘secondment’ to what is now called ‘DR’ (an abbreviation for ‘Dispute Resolution’). Soon after I became a partner, in 1967, I suggested to Alan that we should generate contacts with the Institute. He agreed, and we invited the then Chairman of the Institute, as well as its Secretary-General, Bertie Vigrass, to lunch in our offices, and this event initiated a long and fruitful relationship. For the next 20 years or so, I took an active interest in the ‘technical’ (arbitration) side of the Institute’s activities, albeit (while I admired the commitment of those who did) not in the ‘governance’ or ‘political’ aspects of its affairs.
37.06 During this period I became a member of various committees of the Institute, including the ‘Arbitration Committee’ which was, inter alia, responsible for assessing current, and possible future, practices in connection with the conduct of arbitrations by tribunals composed of sole arbitrators or three members, qualified in accordance with the Institute’s criteria, and pursuant to its training courses. I also became a Fellow of the Institute, and—later, when the classification was introduced—a Chartered Arbitrator.
37.07 One particular aspect of the conduct of arbitrations that was (and still is) of particular interest to me is the taking of evidence by arbitral tribunals. I have always regarded this as a matter of supreme importance, because (in my experience) most commercial disputes are decided by arbitral tribunals on the basis of the material facts, rather than on an erudite analysis of the transaction agreement, or a microscopic evaluation of the provisions of the applicable national law.
(a) Common law jurisdictions
37.08 Historically, the reception of evidence by courts and arbitrators in most of the common law countries (with the exception of India) has for centuries been influenced by the existence of jury trials. In the US courts, disputed facts are determined by juries in criminal and in civil cases; in England the material facts are determined by juries only in criminal cases (as well as in some defamation lawsuits); in India (by far the most populous nation among the common law jurisdictions) in no cases—civil or criminal—are the disputed facts determined by juries. Thus, there is no general procedural practice in the leading common law countries. It is unrealistic to expect jurors who are not trained in the law to ignore evidence that they have read, or heard, but should not take into account when assessing the evidentiary value of materials put before them.
37.09 This scenario has led to the development of a substantial body of law on the admissibility of evidence. Those who have watched television coverage of US trials, whether ‘real-life’ or fictional, may have been struck by the frequent use of the intervention, ‘Objection, your honour’. This can lead to long, and expensive, hearings. In civil law countries, if my understanding is correct, juries are never used in the civil courts, and only rarely in criminal cases. The judge (p. 445) is in complete control of the taking of evidence. There is no prospect of succeeding with an objection on the basis that the evidence that is proposed to be introduced is ‘inadmissible’.
(b) National and international arbitrations
37.10 Where does this leave us in national and/or international arbitration? In England and Wales (in the context, Scotland and Northern Ireland are different jurisdictions), the position has evolved over the last 20 years or so. The first edition of the most authoritative published work of the era stated that:
It is widely believed that an arbitrator, merely because he is an arbitrator, is empowered to act on evidence which would not be strictly admissible in a Court of Law. This is not so. Arbitrators are bound by the law of England, and the rules of admissibility are part of that law.1
Procedural and evidential matters
(f) whether to apply strict rules of evidence (or any other rules) as to the admissibility, relevance or weight of any material (oral, written or other) sought to be tendered on any matters of fact or opinion, and the time, manner and form in which such material should be exchanged and presented;
(p. 446) 37.12 Thus, the position in England appears to have evolved significantly between the time that Sir Michael Mustill and Stewart Boyd QC wrote the two editions of their seminal work in the 1980s and the time of the passage through Parliament of the English Arbitration Act 1996, particularly in relation to the application of ‘strict rules of evidence’ in section 34(2)(f).
37.13 In its role as the leading teaching organization of practical skills for arbitrators,3 based in London, the CIArb has within its grasp the opportunity (some might say the duty) to emphasize the flexibility under English law for arbitrators to assist arbitration in fulfilling its design objective of creating a private, fair, reasonably speedy, and cost-effective system for resolving civil disputes between corporate entities and ‘consenting adults’ (under English law, minors are not capable of entering into enforceable arbitration agreements).
37.14 Another significant element in the evolution of evidence-gathering procedures in arbitration has been the work carried out by the IBA, which has—since 1983—formulated three successive editions of its IBA Rules on the Taking of Evidence, the most recent being the 2010 version. These Rules are specifically designed to be used in the cross-cultural ambience of international arbitrations, in which up to five different legal systems may be applicable.4 They are comprehensive in covering document production, fact witness evidence, expert evidence (both party and tribunal-appointed), and inspection of the subject matter of the dispute.
37.15 The IBA Rules on the Taking of Evidence are generally acknowledged to be the internationally accepted standard in the context of the search for an efficient fact-finding system. They take an informed path between the civil law approach (in which the parties produce nothing more than the evidentiary materials they consider necessary to fulfil their respective burdens of proof) and the common law system (in which old-fashioned and unsustainable twentieth century ‘discovery’ procedures provide for the compulsory production of all material that is ‘relevant’ to the issues in dispute). To this end, the drafters of the Rules designed a two-stage system for producing both documents and witness testimony, aimed at the target of providing the decision-maker(s) with sufficient materials within reasonable time and cost parameters.
37.16 Concerning document production, the two stages are (1) the parties produce the documents on which they rely and (2) they may serve on each other ‘Requests to Produce’ additional documents, which must be for documents that are not only ‘relevant’, but also ‘material to the outcome’ of the case.5 This permits the tribunal to deny requests that it considers to be ‘fishing expeditions’.6
(p. 447) 37.17 Concerning fact witness testimony, the first stage is for the parties to produce signed written witness statements, which are normally treated as their ‘evidence-in-chief’ (or ‘direct testimony’). The second stage is for the witnesses to appear for oral examination, by the tribunal and the parties’ counsel, in order that their written testimony may be tested.
37.18 Both of these practices are now widely adopted in international arbitrations. They are considered by many practitioners—both counsel and arbitrators—to work well at the level of cost-efficiency, and effectiveness in assisting international arbitrators to determine the facts that are ‘relevant and material’ to the outcome of the case.
37.19 With some adjustment to take account of the differences between international and national (sometimes referred to as ‘domestic’) arbitrations, the IBA Rules on the Taking of Evidence may be viewed as valuable guidance in teaching the enhancement of efficiency and cost-effectiveness to arbitrators and prospective arbitrators in both types of arbitrations.
37.20 Of course, there will always be some high value commercial disputes which the parties wish to resolve by arbitration, for confidentiality or other reasons, but also wish to treat as if they were in effect High Court lawsuits, but behind closed doors. Under the English Arbitration Act 1996 they are entitled to do this, if they so agree. They may instruct the most expensive lawyers and arbitrators, and leave no stone unturned in the quest for a favourable result. There is nothing repugnant, or immoral, about this in principle, as long as it is done lawfully and in good faith. Valid questions may arise in the occasional cases in which undue influence (such as bribes or other forms of unlawful pressure) are deployed. However, the vigilance of arbitral institutions, professional bodies, and responsible commentators (as opposed to uninformed media-type ‘gossip’) are generally sufficient to keep such abuses under reasonable control.
37.21 Unfortunately, I believe that some arbitrations are allowed to escalate into extravagant events that become unduly expensive. Whether or not this is the fault of the opposing lawyers, or the result of other factors, is a matter of speculation—and most likely it varies from case to case. However, it is, or should be, the function of the arbitral tribunal (whether it is composed of a sole arbitrator or three members) to do its best to ensure that the costs incurred by the parties are reasonable.
37.22 I believe the Institute has, or should have, a duty to educate its members and students—during their certification process—as to the importance of cost control, and to use their discretionary powers to allocate the costs of legal representation (and other costs) in their awards in a manner that will discourage excessive expenditure by the eventual winning party. Almost all modern sets of institutional international arbitration rules (as well as the UNCITRAL Arbitration Rules) confer powers on the arbitral tribunal designed to give effect to this philosophy. What is needed now is a body of dedicated educationalists to ‘spread the word’.
* © Martin Hunter 2016. The author acknowledges with thanks the valuable contribution of his current research assistant, Valerio Salgado from Sao Paulo, Brazil, who at the time of writing was an LLM candidate at King’s College London.
2 ibid (2nd edn, 1989) 352–4.
4 The five different legal systems which may be applicable are: (a) the law applicable to the arbitration agreement; (b) the law governing the arbitration itself, and its procedure; (c) the substantive law applicable to the transaction agreement (and the merits of the dispute); (d) the law(s) applicable to the parties (eg as to capacity to arbitrate); and (e) the law(s) applicable to the tribunal, and the individual arbitrators.
5 On the IBA Rules on the Taking of Evidence, see Mark McNeill and Margaret Clare Ryan, ‘Meeting the Requirements of Article 3(3) of the IBA Rules: Recommendations for Successful Requests for Document Production’ in Julio César Betancourt (ed), Defining Issues in International Arbitration: Celebrating 100 Years of the Chartered Institute of Arbitrators (OUP 2016) ch 17.
6 I recall arbitrations in the twentieth century in which witnesses were subjected, literally, to several days of cross-examination, which hardly ever enlightened the arbitral tribunal in making its decision on contested facts. In the twenty-first century it is rare for any witness to be cross-examined for more than a couple of hours in an international arbitration. For a discussion, see Lawrence W Newman, ‘Cross-Examination of Fact Witness Statements in International Arbitration’ in Julio César Betancourt (ed), Defining Issues in International Arbitration: Celebrating 100 Years of the Chartered Institute of Arbitrators (OUP 2016) ch 18.