Perspectives on Document Disclosure

Introduction

The outcome of most arbitrations is highly dependent on factual determinations.^[2] However, depending on the cultural and legal background of the parties in an inter­national arbitration, their ideas about how the fact-finding process is to be conducted and, thus, how factual determinations are made, differs significantly. In general, one tool to discover written evidence – hence facts – is through document disclosure and document production, respectively.^[3] Although there is no universally accepted definition of the term ‘document production’, for the purposes of this chapter, the authors will rely on the following definition: ‘document production is a procedural device to obtain documents’.^[4]

The purpose and extent of document production in international arbitration is subject to controversial discussions and not clearly defined, as parties, counsel, arbitrators and scholars often have differing opinions on this topic. Most questions and uncertainties in connection with document production are closely linked to the different principles and legal approaches taken when it comes to the search for truth and facts. Whereas for practitioners raised in common law traditions the starting point of the fact-finding process often is the discovery and disclosure of documents by both parties, the civil law approach is primarily based on the principle of burden of proof.

In the common law world, the disclosure of all documents in connection with a dispute is often seen as a condition for justice and, hence, obligations for a party to produce all relevant documents are thought to be fair and justified. In general, it is mainly up to the parties to collect the evidence that is to be considered by the tribunal. However, not all discovered documents are later used at trial. Rather, it is up to the parties to decide which evidence they will present in court. Afterwards, the judge will form a judgment on the basis of these presentations.^[5] Hence, in a common law world, it is usually not sufficient for a party to rely on its own documents and the discovery of documents is found to be necessary to establish the truth and do justice.

By contrast, in civil law jurisdictions, the underlying idea regarding the taking of evidence is that each party has its own version of what happened. As a matter of principle, each party builds its case primarily on the evidence it has available. Additionally, the burden of proof requires each party to prove the facts on which it relies in support of its case. In general, no party has a duty to assist an opponent in the construction of its case. Despite this, requests for document production are admissible in most civil law jurisdictions, but they generally have to be narrow and very specific.^[6] As a rule, a judge will order the production of individual and essential documents if the requesting party has the burden of proof and is able to identify precisely what documents exist and for which purpose.^[7] As it is up to the judge to decide whether to grant the production of documents (ordinarily referred to as ‘edition of documents’), document production is rather considered an intervention of the state into a private law setting.^[8]

One of the challenges in international arbitration is to deal with these different starting points and expectations. The arbitral tribunal must find a way to balance the conflicting understandings of parties, arbitrators and counsel. Particularly when dealing with parties or counsel (or both) from different legal traditions, an arbitral tribunal must seek a reasonable compromise. As there is no universally recognised set of procedural rules, each arbitral tribunal should decide case by case whether document production shall be part of the arbitration proceedings and, if so, to what extent and for which purpose. In a tailor-made approach, not in standard solutions, lies the strength of international arbitration. It should be acknowledged that each case deserves to be treated individually.

Historical overview and current tendencies

In the past, parties, counsel, arbitrators and arbitral institutions in international arbitrations would typically approach the topic of document production in accordance with their respective legal traditions and backgrounds. Hence, arbitral proceedings with parties, counsel and arbitrators from a civil law background were mostly conducted without or with very limited possibilities for requesting documents from the other side. By contrast, parties, counsel and arbitrators from common law jurisdictions generally foresaw in their arbitral proceedings the possibility to receive extensive document production as a key procedural step.

For a long time, there was no general understanding or guideline for how to deal with document production in a cross-cultural setting (i.e., with parties from different legal traditions). Without such guidance, the matter was addressed case by case. A few decades ago, it was not unusual in international arbitrations – even with cross-cultural parties – for proceedings not to have any document production at all. At that time, document production, particularly in civil law proceedings, was not considered to be a standard part, which considerably shortened arbitration proceedings.

This has changed significantly in the past two decades. One main reason for this change was the issuance of the International Bar Association’s Rules on the Taking of Evidence in International Arbitration (the IBA Rules) in 1999. These Rules have become a standard solution in any arbitration and are widely accepted. Some authors now consider them to be best practice.^[9]

The IBA Rules ‘are intended to provide an efficient, economical and fair process for the taking of evidence in international arbitrations, particularly those between Parties from different legal traditions. They are designed to supplement the legal provisions and the institutional, ad hoc or other rules that apply to the conduct of the arbitration’.^[10] Hence, the initial objective of the IBA Rules was to offer a way of bridging the gap between different procedural cultures in international arbitration. However, this cross-cultural objective has almost been forgotten over time and most arbitrators now follow the IBA Rules as a general source of inspiration or guidance, even if only parties from countries with civil law traditions are involved. This is so particularly in respect of document production. Ever since the issuance of the IBA Rules, document production is almost always provided for in the procedural timetable of arbitral proceedings, without questioning the need for it. Furthermore, the scope of document production has increased over time and document production has become more standardised.^[11] Nowadays, the main issue is not if, but rather how much, document production is required.^[12]

The sometimes awkward result of this situation is that even in a domestic civil law arbitration, or in an international arbitration where only parties from civil law backgrounds are involved, document production is routinely inserted in the procedural calendar. Even though there is no – and never was – an automatic right to document production in international arbitration, it has become the ‘standard’ in the past two decades.^[13] Hence, it seems that the common law position dominates international arbitration when it comes to document production and the idea of managing the parties’ expectations at the time the contract was concluded is often lost.

Particularly in a purely civil law environment, or when a contract was entered into before the IBA Rules came into play, this seems highly critical and sometimes unfair. In such cases, the parties – when negotiating the contract – often agreed to a dispute resolution clause without being aware that they could once be compelled by the other side, or by the arbitral tribunal, to disclose confidential or internal documents about the deal, or otherwise inaccessible information in their files. Nowadays, a civil law party that enters into an arbitration agreement with another civil law party risks being compelled to make disclosures to the other side and the arbitral tribunal to a degree that it would never have to in an ordinary court proceeding at home. The ill-conceived and automatic arrangement of document production in such a situation is highly doubtful from a civil law perspective.

Pros and cons of document production and perspectives

Pros and cons

Document production as a tool to discover secret facts and written evidence may be a forceful and beneficial tool for the requesting party and may even be decisive for winning the case. Furthermore, the duty to disclose documents to the opposing party may result in all parties having equal and full knowledge of a broad range of facts.^[14] Hence, document production may establish an ‘equality of arms’ and guarantee a fair proceeding, and may improve the chances of finding the truth. Typically, a party can better prepare its case and it may make the outcome more predictable.

By contrast, document production is often very time-consuming and may lead to excessive costs. This procedural phase can be misused to intrude into confidential, irrelevant or otherwise sensitive details about the other side and it often leads to heated procedural disputes that may be totally irrelevant at the end of a case. This not only complicates arbitration proceedings but also leads to inefficiency. The possibility of broad document production may also tempt a party to file a claim with the intent to collect the required evidence by means of a ‘fishing expedition’. The IBA Rules prohibit this, but the way to establish a fishing expedition may be long and costly.

What also needs to be considered is the effect of standardised and automatic document production. Some of the biggest benefits of arbitration, as compared to litigation, are that it is flexible, it can be adapted to individual needs, and the limited grounds to challenge an award. A standardised, automatic process weakens these benefits. Furthermore, a highly controversial issue such as document production sometimes offers grounds to challenge an award.^[15] The result of this may lead some parties to prefer court litigation over arbitration, which is to be considered a ‘con’ of document production.

Perspectives

To properly analyse the topic of document production, it is important to understand that the players in this field have different expectations and perspectives on the issue – and the perspectives of parties, counsel and arbitrators do rarely coincide.

Parties

The view of parties on document production depends, inter alia, on their origins, their cultural background, the background of the employees or attorneys who negotiated the contract, the chosen place of arbitration, former experiences of arbitration and the applicable law. Together, these criteria form the basket of expectations of one party. The crucial question is at what time the parties’ expectations should coincide – when the contract was concluded or at the moment of the beginning of an arbitration proceeding?^[16] Since the perspective of a party regularly changes once a dispute arises, the authors take the view that the parties’ expectations at the time of conclusion of the contract should be relevant. This expectation is not always easy to establish. In this connection, the following question may be asked: Did or could the party signing a contract with an arbitration clause foresee that in the event of a dispute it would have to hand over to the other side and to the tribunal internal corporate documents, other non-public documents, internal assessments, files, or even confidential information that may be relevant for the dispute? Or, to put it differently, would such a party, at the time, have been rather shocked to learn that its internal and maybe confidential documents must be handed over to the opposing party and the tribunal when agreeing to arbitrate?^[17]

It is not only the expectations of the parties that may be important, but also the effect on costs and the length of an arbitration proceeding. In this context, the 2021 International Arbitration Survey conducted by the Queen Mary University of London and White & Case offers an interesting perspective from parties on document production in international arbitration.^[18] When participants of the survey were asked which procedural options they would be willing to forgo if it would make their arbitration cheaper or faster, document production was the number three choice. Twenty-seven per cent of the interviewees emphasised that document production can be a very costly and time-consuming process. This time and cost are often disproportionate, in their opinion, to the benefits that a party might hope to gain from it.^[19]

Counsel

Counsel may have their own understanding and preference regarding document production, which is often influenced by experiences from their home jurisdiction. Even more important for counsel are strategic viewpoints. Counsel will often assess the need for document production based on the strength and weaknesses of a client’s case, and they are less sensitive to the cost and time issues. They will plead for document production when the party they represent is more likely to benefit. On the other hand, they will seek to avoid or limit it if the risks for the client outweigh the benefits.

Counsel should address this issue very early in the proceedings, as the question and scope of document production may influence the choice of arbitrator in a particular case. When sifting through potential arbitrator candidates, counsel should already know whether an arbitrator under consideration prefers narrow or broad document production and should make the selection accordingly.^[20] Thereafter, counsel can again influence the level of document production at the initial organisational case management conference at which specific procedural rules are typically discussed. Finally, counsel can influence the scope of documents production when drafting or responding to document production requests.

Depending on whether they represent claimant or respondent, counsel’s view on the extent, form and timing will vary significantly. Although counsel of claimants will generally want to file their requests for document production as early as possible in the proceedings, counsel of respondents will prefer to schedule document production at a later stage. A claimant usually knows when presenting its case whether documents from the opposing party are needed. There is no reason for the claimant to postpone such a request until after the first exchange of submissions. On the other hand, a respondent’s counsel must bear in mind that produced documents may raise new issues. The later in the proceedings the parties are, the less opportunity there is to address such new issues. Moreover, filing requests at a later stage of the arbitration also means that the arbitral tribunal is already better informed about the case and in a better position to reject a document that has been requested.

Additionally, requests for document production give counsel the opportunity to comment in advance on the content of certain hot topics. Hence, to some extent, document production may be misused to make additional submissions. Counsel must think about the preferred form of filing their requests. The authors suggest a table presentation in a Redfern Schedule will facilitate the work of the arbitral tribunal and will make the process of document production more efficient. However, the risk of misuse cannot be excluded even if using such a table format.

From a psychological point of view, counsel may consider how the party it represents will respond to document production requests that are rejected. It may be very discouraging for a party when broad and multiple document production requests are all rejected. A party may consider this as an indication for the decision on the merits. Therefore, it is advisable for counsel to realistically evaluate the chances to prevail but also prepare its party for a negative outcome. It can be equally detrimental from a psychological point of view if the opposing party avoids producing documents that are within its control even though the arbitral tribunal has ordered it to do so. Counsel should consider allowing arbitrators to draw negative inferences from such a refusal.

Arbitrators

Eventually, the issues regarding document production will have to be resolved by the arbitrators. It is undisputed that one of the main functions and duties of arbitrators is to meet the parties’ joint expectations procedurally. Nevertheless, this fundamental principle of international arbitration contrasts with another well-established rule, namely the duty of the arbitrators to conduct an arbitration efficiently. It is up to the arbitrators to balance these different expectations and to manage the arbitration process in a way that satisfies the major needs.

No automatic document production phase

Against this background and given that practices and views on document production vary widely around the world, the authors believe that what is now understood to be ‘best practice’, namely, automatically building a standardised document production phase into the schedule of each international arbitration proceeding, should be questioned. It would be preferable for the arbitrators to take a step back at the beginning of the proceedings and first initiate a brief survey of the parties as to whether there should be any document production at all. Thus, as now happens typically, the document production phase should not be proposed automatically by the arbitrators and inserted in a draft Procedural Order No. 1 (PO1), which is sent to the parties in preparation for the case management conference, without seeking the parties’ view on this important issue beforehand. It is extremely frustrating for a party that wishes to exclude a document production phase altogether if it needs to challenge such a costly and time-consuming step after it was already proposed and incorporated in a corresponding draft procedural order and draft timetable by the arbitral tribunal. Only once the debate about the principle of document production has been thoroughly conducted, and thereby the right to be heard has been granted to all parties, the arbitral tribunal should draft its PO1 and the timetable. Current practice amounts to a clear disrespect of the right to be heard of a party that resists a document production phase altogether. The ‘best practice’ should be changed.

It is perfectly acceptable to discuss the time needs and the timetable at the initial management conference, provided the parties had a chance beforehand to express their opinions on this important issue. It is not acceptable for the arbitral tribunal to propose a document production phase on its own and automatically, without giving an opposing party a chance first to argue against such a course of action. Even though arbitral tribunals normally declare their draft orders and timetables issued before the management conference to be non-binding, it is a fact that a party wishing to conduct document production is backed considerably by the arbitral tribunal’s premature and non-debated proposals. It is the authors’ view that only once all parties have had a thorough chance to express their positions with respect to the question of whether there should be document production at all, the tribunal should make a proposal. Once the debate has been conducted, and only if the tribunal is convinced that a document production phase is needed, the next question should be about its scope.

Current practice by many arbitrators to build in a document production phase without really discussing it with the parties should be abandoned.

In spite of the IBA Rules, an arbitral tribunal should never apply an automatic, standardised, one-size-fits-all approach when addressing the principle or scope of document production. The need for document production in a complex construction case might be quite different from a case evolving simply from contract interpretation issues. The arbitrators must also decide which criteria shall be applied when deciding on document production requests. The most popular, and maybe easiest, way is by resorting to the IBA Rules as a guideline only and following them as needed. In doing so, the arbitral tribunal will apply the criteria of relevance and materiality, specificity, the condition that the requested document exists and that it is in the possession of the other party. Some authors advocate that the requesting party must also have the burden of proof on issues for which they are seeking documents from the opposing side. This additional criterion is intended to avoid misuse and prevent an avalanche of unnecessary documents. The authors support the burden-of-proof approach as an additional requirement for granting document production, but suggest discussing this with the parties in advance.

Finally, it will be the duty of the arbitrators to apply the above criteria when asked to decide on contested document production requests. Thereby, the perspective and approach of each arbitrator will once again be relevant.

Conclusion

Document production is a highly controversial topic, even though the IBA Rules offer a widely known guideline in this regard. National norms regarding document production differ sometimes significantly in civil law and common law systems. Nevertheless, in recent decades, it has become standard practice in arbitration to include a document production phase regardless of the parties’ background, and the scope of document production has grown ever larger. This trend is troubling and is at odds with the inherent advantage of arbitration: the ability to tailor a proceeding to the needs of each case.

Hence, in an international arbitration environment, the first question to be addressed should be whether there will be document production at all. Only if appropriate for a specific case, and in a second step, should the question be raised of how much document production is proper. The arbitrators should not automatically assume that document production is desired by all parties or useful in any case. ‘Boiler plate’ solutions without even discussing the issues with the parties beforehand should be avoided. Arbitrators who disregard this need, curtail the right to be heard of the party objecting to the production of documents and impose a potentially lengthy, expensive and unnecessary phase of procedure that is contrary to the parties’ original expectations when they entered the contract.

The right to be heard of a party opposing document production can be safeguarded easily by requesting all parties, prior to issuing any procedural orders or timetables in this respect, to answer the simple questions of whether they consider document production to be needed and, if yes, to what extent? What is often considered to be best practice by tribunals (i.e., to allow document production within the framework of the IBA Rules) can be a valid compromise in many cross-cultural arbitrations, but it should never be proposed by the tribunal beforehand, without hearing the parties on this issue. By blindly following what is misconstrued as standardised best practice, the arbitral tribunal abandons the inherent advantage of arbitration, which is to provide parties with a customised process rather than a standardised mass product. Or, to put it in another way, it should not be underestimated that the automatic inclusion of a standardised document production phase may discourage parties, in particular those in civil law countries, from choosing arbitration over litigation.

Notes