CONDUCT OF THE ARBITRAL PROCEEDINGS

In general, institutional rules provide only an outline of the steps which need to be taken. This provides flexibility, which is one of the attractions of international arbitration.

While the proceedings can be conducted in different ways, there are some key issues which regularly arise during the course of arbitration proceedings:

Bifurcation of Liability and Quantum Issues: One issue that often arises is whether the questions of liability and quantum should be dealt with separately. Quantifying claims/counter-claims in many commercial disputes is often a very time consuming and costly exercise, necessitating the consideration by the tribunal of many volumes of documentation, as well as the involvement of one or more quantum experts on each side who usually produce voluminous expert reports. In such cases, it may be more efficient procedurally and economically for the tribunal to decide on liability before embarking on the issues of quantum, so that the parties avoid expending time and money on evidence which may be irrelevant once a decision on liability is reached.

Disclosure of Documents: The expectation of the scope of document production will usually vary depending on the jurisdiction and/or background of the counsel representing each party. These expectations largely derive from the applicable civil procedure rules used in litigation in national courts. For example, the scope of documents to which a party to litigation is entitled under the US Federal Rules of Civil Procedure is wider than that in most other common law and almost all civil law countries, whereas there is generally no or only a very restricted obligation on the parties in civil law countries to provide any “disclosure” or “discovery” of documents other than those on which they intend to rely. Court rules on disclosure do not apply to international arbitration. Attitudes of tribunals to disclosure issues can vary greatly, making this one of the most debated areas in arbitration. However, there is something of a consensus to the effect that some disclosure by a party of potentially unfavourable documents should occur but that disclosure in arbitration will generally be more specific rather than general and fall short of the very heavy obligations under most common law systems.

The parties and tribunals often adopt the “Rules for the Taking of Evidence in International Commercial Arbitration” produced by the International Bar Association (the “IBA Rules”), which are widely considered to be an international standard for document production in arbitration. Where disputes arise between the parties as to the relevance/materiality of the requested documentary evidence, the tribunal will, under the IBA Rules, decide whether such a request should be denied or granted, weighing the considerations of materiality against proportionality.

In recent years, several arbitral institutions including the ICC (ICC Commission Report on Techniques for Managing Electronic Document Production When it is Permitted or Required in International Arbitration, 2011), IBA (IBA Rules on the Taking of Evidence in International Arbitration, 29 May 2010), AAA/ICDR (The ICDR Guidelines for Arbitrators Concerning Exchanges of Information) and the Chartered Institute of Arbitrators (“CIArb”) (CIArb Protocol for E-Disclosure in Arbitration, October 2008) have either investigated the issues relating to management of e-disclosure, or revised their rules or issued guidelines to address the challenges presented by such disclosure, with varying approaches, from strictly minimalist guidance (e.g., AAA/ICDR) to a “checklist” intended to guide the parties and the tribunal (CIArb).

In England & Wales, under s.34(2)(d) of the Arbitration Act, it is for the tribunal to decide on the scope of document production, unless the parties have agreed otherwise. In English arbitrations, if a party fails to comply with the tribunal’s document production order, s.41(7) of the Arbitration Act allows the tribunal to draw adverse inferences and/or make appropriate orders as to costs, or seek an order from the court under s.42(1) of the Act.

Interim Relief: It may be necessary, in the course of arbitral proceedings, for either the arbitral tribunal or a local court to issue orders binding on the parties in order to preserve the status quo awaiting the outcome of the arbitration. Such orders may include “holding” orders aimed at preserving evidence or protecting assets. In institutional arbitrations, the arbitral tribunal will usually have the express power to issue such orders under the applicable institutional rules. In certain circumstances, however, the tribunal may not have the requisite powers or its powers may not be sufficient. These include, for example, situations where the tribunal itself has not yet been established and is therefore unable to issue interim orders (although some arbitration institutions, such as the ICC, have addressed this issue by allowing a party in need of urgent interim or conservatory measures that cannot await the constitution of the tribunal to apply for such measures to an “emergency arbitrator” or a need for an order binding on a third party (as the tribunal’s orders are binding only on the parties to the arbitration itself), such as a bank; or a need to make a without notice application against a party to the arbitration, e.g., for an order freezing its assets or bank accounts.

Under most developed arbitration laws, national courts have inherent powers to issue interim measures in support of arbitrations. The Arbitration Act sets out circumstances in which the English court may exercise its powers to support arbitral proceedings in s.44:

  • “If the case is one of urgency, the court may, on the application of a party or proposed party to the arbitral proceedings, make such orders as it thinks necessary for the purpose of preserving evidence or assets.
  • If the case is not one of urgency, the court shall act only on the application of a party to the arbitral proceedings (upon notice to the other parties and to the tribunal) made with the permission of the tribunal or the agreement in writing of the other parties.
  • In any case the court shall act only if or to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively. “

As regards the nature of the interim measure sought, they may take different forms and will vary in different jurisdictions, and will usually be set out in the national arbitration legislation. As a general guide, the categories of such measures will usually include measures to secure attendance of witnesses, preserve evidence, preserve status quo and measures dealing with documentary disclosure.

Regulation of the Conduct of the Proceedings – Procedural Timetable: One of the first things an arbitral tribunal, once appointed, will do is invite the parties to agree a “procedural timetable” for the dispute, i.e. the steps in the arbitral proceedings and the time-frames for achieving them. If the parties are unable to agree the timetable (or particular aspects of it), the tribunal will ultimately impose one. In doing so, the tribunal will strive to balance the interests of both parties, and ensure that each has an opportunity to present its case, so as to limit any potential challenges to the award ultimately rendered by the tribunal and to make such award enforceable.

Confidentiality: Confidentiality can be an important consideration when deciding which dispute resolution method to choose. Generally, the parties are more likely to achieve a confidential and private dispute resolution process in arbitration than in litigation. It is always open to the parties to include an express obligation of confidentiality in their arbitration agreement and they would generally be well advised to do so if this is important to them. This is because, while in some jurisdictions national arbitration laws provide for confidentiality in arbitration, other arbitration laws do not and the same is true of the various institutional rules.

The Arbitration Act is silent on confidentiality, although English common law recognises an implied term of the arbitration agreement that arbitration be private and that certain documents created in relation to an arbitration are confidential (subject to certain exceptions). Rule 30 of the LCIA Rules provides that, unless the parties agree otherwise, they shall keep confidential all awards in the arbitration, all materials in the proceedings created for the purpose of the arbitration and all other documents produced by another party to proceedings not otherwise in the public domain, subject to disclosure being required “by legal duty, to protect or pursue a legal right or to enforce or challenge an award in bona fide legal proceedings before a state court or other judicial authority”. As regards investment arbitration, even where arbitration is not conducted under ICSID Rules (where there is no general duty of confidentiality unless the parties agree otherwise), confidentiality of proceedings is increasingly difficult to enforce.