Discovery in Arbitration: Recent Developments
Discovery in Arbitration: Recent Developments
Discovery — the compelled disclosure of documents and other potential evidence in advance of a hearing — has long provoked controversy in international commercial arbitration. The increasing use of American-style discovery procedures in arbitrations, including sweeping requests for paper and electronic document production and depositions, has drawn particular criticism.1 In the past two years, two of the leading arbitral institutions have responded with new instruments aimed at regulating or restricting discovery in international commercial arbitration, and a third is in the process of drafting guidelines of its own.
- In August 2007, the International Chamber of Commerce Commission on Arbitration (ICC Commission) issued a report on Techniques for Controlling Time and Costs in Arbitration.2
- In May 2008, the International Centre for Dispute Resolution (ICDR) (the international arm of the American Arbitration Association) issued its Guidelines for Arbitrators Concerning Exchanges of Information.3
- The International Institute for Conflict Prevention & Resolution (CPR) is drafting Guidelines on Pre-Hearing Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration and has released an advanced draft.4
This article examines these recent codifications, which are important not only to parties and their counsel in matters to which they may apply, but also to those interested in arbitration generally. They are the arbitration community's most comprehensive attempt to give voice to, and grapple with, the disfavour with which US-style discovery is viewed in international commercial arbitration. In varying ways, they attempt to strike a balance between imposing prohibitions and leaving the scope of discovery to the unguided discretion of parties and individual tribunals.
Early attempts at codification
Most arbitration rules have said very little, if anything, about discovery. They typically permit the tribunal to run things as it sees fit, subject to the broad requirements of fairness and providing each party the opportunity to be heard.5 Most sets of rules also make clear that a tribunal can direct a party to produce documents or information to the other side but provide no guidelines on how these powers should be used.6
Two early attempts to put flesh on this skeleton were led by the United Nations Commission on International Trade Law (UNCITRAL) and the International Bar Association (IBA).
While it was a ground-breaking attempt at codification of best practices, the 1996 UNCITRAL Notes on Organizing Arbitral Proceedings almost entirely avoided the topic of discovery.7 The Notes touch briefly on whether a tribunal should require notice of identity of witnesses and witness statements in advance of a hearing,8 but they barely mention document production. Here is everything that the Notes say on whether parties should be compelled to disclose documents to the other side:
Procedures and practices differ widely as to the conditions under which the arbitral tribunal may require a party to produce documents. Therefore, the arbitral tribunal might consider it useful, when the agreed arbitration rules do not provide specific conditions, to clarify to the parties the manner in which it intends to proceed.9
This is typical of the Notes, which are explicitly non-binding and do not express a preference for any particular practices.10
The 1999 IBA Rules on the Taking of Evidence in International Commercial Arbitration address document discovery more fully, but still far from comprehensively. The IBA Rules prescribe advance disclosure of witness identity within a time to be set by the tribunal and suggest the use of witness statements.11 In addition, the IBA Rules include relatively extensive provisions on the compelled production of documents. They set forth a procedure for requests for production, followed by objections and rulings by the arbitrators, that is very similar to the procedures used in US courts.12 The IBA Rules, however, depart significantly from US procedures in the scope of permitted discovery. US courts generally permit discovery 'of any matter relevant to the subject matter involved in the action,' so long as the discovery 'appears reasonably calculated to lead to the discovery of admissible evidence.'13 In a restriction shared by two of the more recent codifications, the IBA Rules limit discovery to documents 'relevant and material to the outcome of the case.'14 The IBA Rules, moreover, require that any request seek 'a narrow and specific requested category of documents that are reasonably believed to exist.'15 So 'fishing expeditions' are not permitted, or at least a requesting party must use a spear rather than a net.16 The IBA Rules — like the UNCITRAL Notes — are non-binding and can only have effect if parties or tribunals affirmatively choose to use them.17
Neither the UNCITRAL Notes nor the IBA Rules use the word 'deposition.' The IBA Rules do address, however, the possibility of obtaining 'evidence from a person who will not appear voluntarily' at the hearing, suggesting that a party may ask the tribunal to 'take whatever steps are legally available to obtain the testimony of that person.'18 The tribunal may then proceed to attempt to obtain such evidence from the unavailable witness 'if in its discretion it determines that the testimony of that witness would be relevant and material.'19
Recent steps toward codification
That was more or less the state of play until last year. In August 2007, after consultations involving a task force with members from 31 countries, the ICC Commission issued its report entitled Techniques for Controlling Time and Cases in Arbitration; and in May 2008, again based on the work of an international task force, the ICDR issued its Guidelines for Arbitrators Concerning Exchanges of Information. At about the same time, CPR published several versions of its draft Guidelines on Pre-Hearing Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration, which are intended for US domestic as well as international CPR cases.
As regards discovery, the ICC Techniques take the IBA Rules as a starting point and make some suggestions on ways to further limit the extent of document discovery. The CPR and ICDR instruments take a more restrictive approach in several ways. Of particular significance, the ICDR Guidelines are binding for all cases administered by the ICDR commenced after 31 May 2008.20 Both documents also address — and discourage — depositions. The ICDR Guidelines address questions of privilege, and the Draft CPR Guidelines address — albeit in a very general way — the important question of preservation of electronic documents.
The chart below summarises the treatment of each of these issues in the three institutions' recent publications.
Addressing key issues in discovery
Binding v non-binding
The ICDR Guidelines break new ground in regulating discovery in that they prescribe binding standards applicable to all ICDR cases commenced after 31 May 2008. The ICC Techniques essentially follow the approach of the 1999 UNCITRAL Notes in highlighting issues and suggesting alternative approaches, but not expressly favouring any particular standard or approach. The ICC report 'encourage[s]' the parties and tribunals to 'think of [the report] as a basis from which to develop the procedures to be used.'21 The Draft CPR Guidelines take a hybrid approach: they take positions on what are preferred practices on the scope of document discovery and the use of depositions, and they say that a CPR arbitral tribunal 'should apply the practices described in these Guidelines.'22 On the other hand, the Draft Guidelines also state that they 'were formulated to inform the process' and 'do not prescribe fixed rules for the organisation of any proceeding.'23 They are thus essentially relatively specific suggestions rather than binding rules.
The ICC, ICDR and draft CPR guides all express disapproval of broad US-style document discovery. Like the IBA Rules, both the ICC and ICDR instruments limit, or suggest limiting, document production to documents that are 'relevant and material.' The draft CPR Guidelines propose to go further, at least conceptually, limiting document production to those documents for which a party has a 'substantial, demonstrable need.' As noted above, both of these standards are considerably more restrictive than the US standard of relevance for discovery. Each of the three documents repeatedly highlights the disfavour with which expansive document discovery is held:
- Describes extensive document production as 'wasteful.'24
- Urges parties to limit the number of document requests they make.25
- Requires requesting parties to provide 'a description of specific documents or classes of documents' they wish to see.26
- Mandates that parties explain the relevance and materiality of requested documents to their case.27
- Arbitral tribunals have the sole power to require and approve the production of documents.28
Summary of Arbitral Institutions' Codifications on Discovery
|ICC Techniques||ICDR Guidelines||Draft||CPR Guidelines|
|Document production||Requested documents must be 'relevant and material'||Requested documents must be 'relevant and material'||Requesting party must have 'substantial, demonstrable need' for documents|
|Specific limitations on scope of e-discovery||Does not address issue||E-docs can be produced in form most convenient to producing party. Requests must be 'narrowly focused' and tribunal may direct testing to focus or limit e-document searches.||Requests must be 'reasonably targeted'|
|E-document retention||Does not address issue||Does not address issue|
Parties should resolve their obligations to preserve documents at initial scheduling conference.
Discovery of back-up tapes, deleted files and metadata should be permitted only if there is a 'reasonable likelihood that files were deliberately destroyed or altered . . . in anticipation of litigation or arbitration.'
|Depositions and other non-document production discovery||Does not address issue||Depositions and other non-document production discovery are 'generally not appropriate procedures' in international arbitrations||Discovery depositions disfavored. Tribunals should require that depositions be 'material,' and should impose 'strict limits' on number and length of depositions|
|Attorney-client privilege||Does not address issue||'Most-protective privilege' rule||Does not address issue|
Draft CPR Guidelines
- '[A]rbitration is not for the litigator who will 'leave no stone unturned.''29
- [Z]ealous advocacy must be tempered by an appreciation of the need for speed and efficiency,' and 'wide-reaching discovery based on possible relevance can be incompatible with these goals.'30
- Arbitrators should weigh the costs and burdens of production against the likely value of the requested documents — and should either deny requests imposing 'substantial' costs and burdens or condition production upon the requesting party bearing the costs of such production.31
Electronic document discovery
The biggest single factor driving up costs of discovery in US litigation today, at least in large cases, is e-mail. Much more today is written down, and much more is retained. When litigation comes, someone needs to locate in that immense cache of archived email and other e?documents the relatively few that are of any significance to the case. Such reviews are enormously expensive.
In addition, it is widely recognised that the onset of litigation requires that relevant documents that might otherwise have been routinely destroyed must be preserved. In most cases, the mechanisms to preserve potential evidence have to be put in place before either the full scope of the case or the location of relevant documents is known, and certainly before any review to find the relevant documents has been conducted. Implementing such mechanisms can itself impose major costs because they often involve suspending the re-use of back-up tapes and interrupting other ongoing operating procedures.
In US litigation, at some point in some cases one party accuses the other of having 'destroyed' documents that should have been kept. Such charges can unleash investigations into how documents were preserved, whether back-up tapes were improperly overwritten, whether materials can be retrieved from supposedly erased tapes, and the like.
Arbitration, of course, is not litigation. No rules or procedural laws require any particular approach to preservation of documents, electronic or otherwise, that might be relevant in arbitration.32 Failures to act reasonably in retaining documents are treated by arbitrators, when they arise, on an ad hoc basis. Previously, no rules or guidelines have attempted to address e?discovery, and there has been a risk that the wide-ranging and highly technical electronic discovery practices of US litigation might be imported into arbitration.
The ICC Techniques are silent on these 'e-discovery' issues, but the ICDR and Draft CPR Guidelines each attempt to find a formula to rein in these costs without restricting legitimate inquiry. The ICDR Guidelines treat e?documents as a subset of all documents and do not propose to regulate their production in minute detail, but they do require that requests for production of electronic documents 'be narrowly focused and structured to make searching for them as economical as possible.'33 They also suggest that a tribunal 'may direct testing or other means of focusing and limiting any search' for electronic documents.34 In practice, this may mean that electronic discovery will initially proceed by identifying a limited number of document custodians and searching only their records.
The Draft CPR Guidelines propose to address the problems of e-discovery more comprehensively. They divide requests for production of electronic documents into three categories:
- For production from 'active or archived files of key witnesses or in shared drives used in connection with the matter at issue,' the requests should generally be 'reasonably specific.'
- Production from 'a wide range of users or custodians' should be permitted only with a 'showing of extraordinary need.'
- Requests for 'back-up tapes, deleted files and metadata' should only be granted 'if the requesting party can demonstrate a reasonable likelihood that files were deliberately destroyed or altered by a party in anticipation of litigation or arbitration and outside of that party's usual and customary document-retention policies.'35
With respect to prescribing standards for preservation of electronic documents, the Draft CPR Guidelines break new ground by addressing the issue in an arbitral context, although they say very little. They merely urge parties and tribunals to resolve 'at an initial scheduling conference, or as soon as possible thereafter,' issues regarding the scope of the parties' obligation to preserve documents for potential disclosure in the arbitration.36
Depositions, requests for admission, interrogatories and other non-document production discovery
US litigation practice includes discovery devices other than document production, such as depositions, requests for admission and interrogatories. Depositions, which are particularly time-
consuming and costly procedures, are both unusual and disfavoured in many non-US venues, and both the ICDR Rules and Draft CPR Guidelines expressly disapprove of their use. The ICC Techniques do not address depositions and other non-document discovery.
- The ICDR Guidelines are relatively uncompromising on the question of non-documentary discovery. They say, '[d]epositions, interrogatories, and requests to admit… are generally not appropriate procedures for obtaining information in international arbitrations.'37
Draft CPR Guidelines
- The Draft CPR Guidelines strongly discourage discovery depositions, describing them as 'costly and time-consuming' processes which can be replaced by witness statements.38
- An arbitral tribunal faced with a request for depositions should require a showing that the witnesses' testimony will be 'material to the outcome of the case.'39
- Arbitral tribunals should impose 'strict limits on the number and length of any depositions allowed.'40
Attorney-client privilege poses a choice-of-law issue: what rules of privilege apply in a dispute that crosses jurisdictional boundaries? Among the choices are: (i) the rules of privilege at the place where the client is located or resides, (ii) the rules of privilege at the place where the lawyer is located or has his or her principal place of business, and (iii) the rules of privilege at the place of arbitration. US courts have adopted a variety of approaches.41 Of the three instruments considered here, only the ICDR Guidelines address this issue. They apply what may be called the 'most-
protective privilege' rule, instructing tribunals to examine the privilege rules applicable in each party's jurisdiction and 'to the extent possible apply the same rule to both sides, giving preference to the rule that provides the highest level of protection.'42
All of the institutional efforts to address discovery in arbitration over the last decade have sought to give voice to the perceived need to restrict (but not suppress entirely) US-style discovery. With these three most recent contributions, the balance between unguided arbitrator discretion and uniformity of procedure under rules or guidelines is tipping in the direction of uniformity. Progressing from the UNCITRAL Notes to the IBA Rules, and then to the ICC Techniques, the ICDR Guidelines and finally to the Draft CPR Guidelines, arbitral organisations and administering institutions have come a long way in setting out standards and recommendations for discovery in arbitrations. The evolutionary direction is away from mere suggestions and toward binding rules, and also towards greater specificity in the standards to be applied. These standards, which articulate a shared sense of what arbitration is supposed to be, are likely to be cited and influential in arbitrations beyond the particular arbitrations in which they formally apply and beyond arbitrations administered by the institutions that issued them.
* The authors wish to thank Pearline Kyi, a 2008 summer associate at Sullivan & Cromwell LLP, and Brian L Frye, an associate at the firm, for their intelligent and invaluable assistance in the preparation of this article.
1. Anna Conley, 'A New World of Discovery: The Ramifications of Two Recent Federal Courts' Decisions Granting Judicial Assistance to Arbitral Tribunals Pursuant to 28 U.S.C. section 1782,' 17 Am Rev Int'l Arb 45, 46 (2006); Peter Ashford, 'Documentary Discovery and International Commercial Arbitration,' 17 Am Rev Int'l Arb 89, 93 (2006); Joseph R Profaizer, 'International Arbitration: Now Getting Longer and More Costly,' Nat'l L J, July 28, 2008, at S1; Bernardo M Cremades, 'Managing Discovery in International Arbitration,' Dispute Resolution J, Nov 2002-Jan 2003, at 73.
2. Int'l Chamber of Commerce, Publ'n No. 843, Techniques for Controlling Time and Costs in Arbitration (2007), available at www.iccwbo.org/uploadedFiles/TimeCost_E.pdf (ICC Techniques).
3. Int'l Centre for Dispute Resolution, ICDR Guidelines for Arbitrators Concerning Exchanges of Information (2008), available at www.adr.org/si.asp?id=5288 (ICDR Guidelines). Mr Carter was co-chair of the task force that drafted the ICDR Guidelines.
4. Int'l Inst for Conflict Prevention & Resolution, CPR Guidelines on Pre-Hearing Disclosure of Documents & Presentation of Witnesses in Commercial Arbitration (revised draft 18 June 2008), available at www.cpradr.org (this document is in the members' section of the website, which requires a password for access) (Draft CPR Guidelines). In addition, at the time of going to press the Chartered Institute of Arbitrators was reportedly about to issue a Protocol for E-Disclosure in Arbitration, apparently covering some of this ground.
5. International Chamber of Commerce Rules, article 15.2 (2008), available at www.iccwbo.org/uploadedFiles/Court/Arbitration/other/rules_arb_english.pdf (ICC Rules); International Center for Dispute Resolution International Arbitration Rules, article 16.1 (2008), available at www.adr.org/sp.asp?id=33994 (ICDR Rules); London Court of International Arbitration Rules, article 14.2 (1998), available at www.lcia-arbitration.com (LCIA Rules).
6. ICC Rules, supra note 6, article 20.5 ('At any time during the proceedings, the Arbitral Tribunal may summon any party to provide additional evidence.'); ICDR Rules, supra note 6, article 19.3 ('At any time during the proceedings, the tribunal may order parties to produce other documents, exhibits or other evidence it deems necessary or appropriate.'); LCIA Rules, supra note 6, article 22.1(e) ('Unless the parties at any time agree otherwise in writing, the Arbitral Tribunal shall have the power, on the application of any party or of its own motion, but in either case only after giving the parties a reasonable opportunity to state their views… to 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.').
7. UN Comm'n on Int'l Trade Law, UNCITRAL Notes on Organizing Arbitral Proceedings UN Doc A/CN.9/423 (1996), available at www.uncitral.org/pdf/english/texts/arbitration/arb-notes/arb-notes-e.pdf (UNCITRAL Notes).
8. See UNCITRAL Notes, supra note 8, paragraphs 60-61.
9. UNCITRAL Notes, supra note 8, paragraph 50.
10. UNCITRAL Notes, supra note 8, paragraph 2 ('No legal requirement binding on the arbitrators or the parties is imposed by the Notes. The arbitral tribunal remains free to use the Notes as it sees fit and is not required to give reasons for disregarding them.').
11. IBA Rules on the Taking of Evidence in Commercial Arbitration, article 4, sections 4-5 (1999), available at www.ibanet.org/images/downloads/pubs/IBA-Rules-on-Taking-of-Evidence.pdf (IBA Rules).
12. IBA Rules, supra note 12, article 3, sections 1-12.
13. Fed R Civ P 26(b)(1).
14. IBA Rules, supra note 12, article 3, section 3(b) (emphasis added).
15. IBA Rules, supra note 12, article 3, section 3(a). Also, '[a] Request to Produce shall contain… a statement that the documents requested are not in the possession, custody or control of the requesting Party, and of the reason why that Party assumes the documents requested to be in the possession, custody or control of the other Party.' Id at article 3, section 3©.
16. The Rules also provide for a party to avoid production of documents on grounds of 'legal impediment or privilege,' 'unreasonable burden,' or 'considerations of fairness or equality of the Parties,' but they provide no guidance on how to apply these concepts. See IBA Rules, supra note 12, article 9, section 2.
17. IBA Rules, supra note 12, Preamble, section 2 ('The Rules are not intended to limit the flexibility that is inherent in, and an advantage of, international arbitration, and Parties and Arbitral Tribunals are free to adapt them to the particular circumstances of each arbitration').
18. IBA Rules, supra note 12, article 4, section 10.
20. ICDR Guidelines, supra note 4, at 1.
21. ICC Techniques, supra note 3, at 8.
22. Draft CPR Guidelines, supra note 5, at 1.
23. Id. The Draft CPR Guidelines also offer parties sample language to address in their arbitration agreement, or separately thereafter, various possible 'modes of disclosure.' For example, the parties might choose Mode A, '[n]o pre-hearing disclosure of documents other than the production, prior to the hearing, of documents that each side will present in support of its case'; or Mode B, '[p]re-hearing production only of documents essential to a matter of import in the proceeding for which a party has a substantial, demonstrable need'; Mode C, 'Mode B plus the production of documents relating to issues in the case' that are in the possession of witnesses; or Mode D, discovery permitted under the Federal Rules of Procedure. Id at 7.
24. ICC Techniques, supra note 3, paragraph 57.
25. Id, paragraphs 53, 55.
26. ICDR Guidelines, supra note 4, paragraph 3(a).
28. Id at paragraph 3(b).
29. Draft CPR Guidelines, supra note 5, at 1.
31. Id at 6.
32. We do not here address rules of substantive law that may impose liability for destroying evidence (spoliation), and might create such a duty even when the underlying claim is subject to an arbitration claim. See generally Jamie S Gorelick et al, Destruction of Evidence (2002).
33. ICDR Guidelines, supra note 4, paragraph 4.
34. Id. The ICDR Guidelines also address the issue of whether a party should produce documents in 'native form' or indeed in any electronic form at all. They permit the producing party to choose the form of production in light of what is most 'convenient and economical,' which may be in paper form, unless the tribunal finds a 'compelling need' for access to documents in a different form. Id.
35. Draft CPR Guidelines, supra note 5, at 4.
36. Id at 5.
37. ICDR Guidelines, supra note 4, paragraph 6(b).
38. Draft CPR Guidelines, supra note 5, at 10.
39. Id at 12.
41. See Malletier v Dooney & Bourke Inc, 2006 US Dist LEXIS 87096, at *57—58 (SDNY 30 Nov 2006) (holding communications of French in-house counsel not privileged because no expectation of confidentiality existed); In re Rivastigmine Patent Litigation, 237 FRD 69, 74 (SDNY 2006)(holding United States privilege law applies '[i]f a communication with a foreign patent agent involves a U.S. patent application' but foreign privilege law applies if the communication involves a foreign patent application) (quoting Bristol-Myers Squibb Co v Rhone-Poulenc Rorer Inc, 1998 US Dist LEXIS 4213 (SDNY 2 April 1998)); In re Philip Services Corp Securities Litigation, 2005 US Dist LEXIS 22998, at *7-13 (SDNY 7 Oct 2005) (holding United States law governed when Canadian lawyers in Canada gave advice with respect to a public offering in the United States, so disclosure of opinion letters to outside auditors waived the privilege even if no waiver would arise in Canada); Renfield Corp v E Remy Martin & Co, 98 FRD 442, 444 (D Del 1982) (holding privilege-protected communication with French in-house counsel under Hague Evidence Convention and concluding 'if a privilege is recognised by either French or United States law, the defendants may invoke it').
42. ICDR Guidelines, supra note 4, paragraph 7.