*Devashish Godbole
- Introduction:
The issue of what constitutes Privilege in the case of International Arbitrations is a hotly contested topic and has a lot of diametrically opposite views. It has been observed that there is no concrete law for privilege, both for attorney-client, as well as documents. In addition to the above, there also arises the issue of admissibility and privilege of wrongfully or illegally obtained documents.
These issues mostly come up in litigation, where the court decides the issue on the basis of the applicable domestic law. But when we are dealing with a multi-jurisdictional arbitration, between two Multi-National Corporations (MNCs), regarding communication that took place between parties in multiple jurisdictions, with individuals and lawyers from multiple countries, then we enter the grey area of law, without any concrete answer. This issue is compounded as most leading arbitration rules like LCIA, ICC, WIPO etc. do not provide guidance on the what constitutes privileged information and documents.
Furthermore, the parties while drafting their arbitration clauses, rarely mention these issues, as it is an assumption that either of the laws provided therein would take care of this issue.[i] This article would discuss in brief what laws are applicable to determining the issue of privilege, while taking evidence in International Arbitration, and mentioning the various challenges that this procedure faces. The article would also analyse contemporary rules and procedures that seek to provide guidance to the tribunals on these issues.
- Law applicable to International Arbitrations:
Due to lack of concrete literature on this topic, Arbitrators often have to decide upon the same and seek a balance between over-exposure of unnecessary documents and ensuring that all the relevant documents come to the fore for the final determination of the facts of the case at hand.
The tribunal has to find a workable solution to the said issue in every case, on an individual basis, rather than following a set precedent, whilst ensuring that the award should not stumble upon the issue of ‘public policy’.
The whole issue of ‘public policy’ drags the discussion in a grey area. And it becomes particularly complicated when we venture in civil law countries, or Far Eastern countries like China, where the law on privilege is totally different than what is generally observed in common law countries. Take a hypothetical example of an arbitration seated in China, where one of the parties is based out of China, and other out of a common law country. The dispute arose out of an allegation of fraud by the Common Law based party; that the Chinese party was responsible for fudging of certain documents, and the parties individually or together submitted these documents for verification. On the question of whether it would be a privileged document, qua the Claimants, it is to be noted that if Common Law were to apply, these documents would be privileged[ii], as they would have been procured for the purposes of impending litigation or dispute. But if the Chinese law,[iii] which does not recognize common law were to apply, the documents would not have been privileged.
Another example can be the rule of disclosure or evidence; where the lawyer-client privilege is generally considered as a rule in common law countries, but is treated as a professional conduct duty or “professional secret” in civil law countries.[iv] Then there is the question of treatment of in-house counsels as lawyers, how settlement and without prejudice talks are viewed etc. which differ from one jurisdiction to the other and have no set universal rules. The determination of allowing or disallowing production of documents boils down to what the tribunal believes to be ‘necessary and justified’ for the purposes of granting or disallowing privilege.[v]
The nationality and legal background of the arbitrators is also an important issue, as is their inherent conception of right and wrong, and procedure are engrained in their respective traditions.[vi]
- Disclosure in International Arbitration:
As a general rule, the disclosure phase in an international arbitration tends to be much shorter and succinct. Unless the parties agree otherwise, the rules of civil procedure governing litigation in the local courts, which is, neither the applicable substantive law (lex causae) nor of the seat of the arbitration (lex arbitri), apply to international arbitration.[vii] Generally, disclosure requests in arbitration proceedings must be sufficiently detailed to identify specific (types of) documents and must provide reasons as to why the information requested is relevant to the dispute, and material to its outcome. This disclosure standard is much more restrictive than the “relevancy” test applied by U.S. courts under Rule 26[viii] or similar state statutes, which do not require a separate showing that the requested information is material to the outcome of the dispute. Further, the practice of depositions, interrogatories, and requests for admission is uncommon in international arbitral proceedings in the U.S. and elsewhere.[ix]
Renowned arbitrator Gabrielle Kaufman Kohler in one of her papers,[x] has stated that some national legislations like the English Arbitration Act, 1996, specifically S. 34, provides that an arbitral tribunal sitting in England has the power to order the parties to produce documents. But other national legislations are silent on this topic. Being a procedural matter, the power of the arbitrators to order document production is governed by the rules on procedure. According to the general principle of party autonomy, the rules on procedure are determined by the parties\’ agreement. The parties can agree procedure either directly or, which is more frequent, indirectly by reference to a set of arbitration rules. Failing an agreement by the parties, be it direct or indirect, the arbitrators have the power to set the procedural rules and thus decide whether and under which standards they may order document discovery.
Practice does confirm that arbitrators have no hesitation in assuming the power to order document production. Practice also shows that they do so whether or not such power is expressly granted by the competent national legislation, the applicable arbitration rules, or the parties\’ agreement. Where there is no express power, they regard it as included within their general authority to determine the procedure failing an agreement by the parties.[xi]
On the question of what requirements must be met while allowing discovery of documents, the authors tend to rely on the IBA Rules on the Taking of Evidence in International Commercial Arbitration (“IBA Rules on Evidence”) – which are now commonly used as guidelines by international tribunals, whereby Article 3(3) states ideas like: Under the standards developed by practice, the documents sought must be identified with reasonable specificity[xii]; they must be relevant to the outcome of the dispute; they must be in the possession or under the control of the opponent; they must not be protected by evidentiary privileges. When applying these standards, the arbitral tribunal should take a number of additional factors into account related to the parties\’ expectations, the proportionality of the request for production, and the effective management of the dispute resolution process.[xiii] The aim is to prevent a broad \”fishing expedition\”, while allowing parties to request documents that are relevant to the case and facts with reasonable specificity.[xiv]
Moreover, Article 9(2)(b) of the these rules states that at the request of the party the arbitrators have the power to exclude from evidence or production any document, statement or oral testimony or inspection for any of the listed reasons, including “legal impediment or privilege under the legal or ethical rules determined by the tribunal to be applicable”. The same list further includes grounds such as commercial or technical confidentiality as well as special political or institutional sensitivity, particularly relevant in Bilateral Investment Treaty arbitrations. If the parties adhere to these IBA guidelines, it essentially gives the tribunal the power to frame its own guidelines of what documents should be treated as privileged and excluded from the evidence.
An example regarding the extensive powers of the tribunal to call upon evidence, and how they are exercised can be seen in an ICC Arbitration award,[xv] was where a diary of a living person was asked to be submitted as evidence in an arbitration, when the laws of India (substantive law) and England (seat) said that written submissions cannot be used by a person as evidence to prove their own evidence. Further, the law also stated that written submissions of a person can only be admissible when the person is dead or not easily found, which was not the case. Despite this, the tribunal stated that neither of the laws would apply to the arbitration as it was an international arbitration, and asked for the documents to be produced as evidence.
The abovementioned ideas also find place in some of the institutional rules, where, Rule 12.2 of the International Institute for Conflict Prevention and Resolution Rules for Non-Administered Arbitration[xvi] states that: “The Tribunal is not required to apply the rules of evidence used in judicial proceedings, provided, however that the Tribunal shall apply the lawyer-client privilege and the work product immunity. The Tribunal shall determine the applicability of any privilege or immunity and the admissibility, relevance, materiality and weight of the evidence offered.”
Though there are cases where the institutional rules give precedence to an individual’s choice and secrecy of professional conduct, like the Zurich Rules of Arbitration, Article 38[xvii], which states inter alia that: “a witness may…refuse testimony which would infringe official or professional secrecy protected by criminal law.. ”. Such provisions give more discretion to the witness to self-determine, albeit within certain guidelines/framework, and to refuse testimony if it is against certain rules of professional conduct. The slightly restricted disclosure and the nature of privilege mirrors the civil law tradition of this provision.
- Conclusion:
From the above examples we can fairly assume that the rules of evidence, and the issue of privilege, are divorced from the laws of any country or any specific legal system, but are formulated in a way to ensure convenience to the tribunal and finality of the award. This tradition has its own pros and cons. On one side it allows the tribunal to distance itself from any legal tradition, making the process truly international in nature, while on the other hand it is virtually impossible to have any kind of precedence or develop a practice/tradition to ensure some certainty in determining evidentiary privilege. And though no specific laws apply to the same, as this is an international arbitration, we can see that the one thing the tribunal needs to take into consideration, is that the award does not fall foul of public policy.
*LL.M. in International Business and Economic Laws, Georgetown University Law Center.
[i] Anna Magdalena Kubalczyk, Evidentiary Rules in International Arbitration – A Comparative Analysis of Approaches and the Need for Regulation, 3(1) GroJIL, 85, 97 (2015).
[ii] Fed. R. Evid. § 502 (g) (2); The Constitution Project, When Congress Comes Calling: Part I: Principles, Practices and Pragmatics of Legislative Inquiry, 66 (Morton Rosenberg, 2nd ed. 2017) https://archive.constitutionproject.org/documents/when-congress-comes-calling-2/ ; F Joseph Warin et. al, Privilege in the United States, 2 (Gibson, Dunn & Crutcher 2016) https://www.gibsondunn.com/wp-content/uploads/documents/publications/Warin-Chung-Know-how-US-Privilege-GIR-November-2016.pdf
[iii] Richard Bartlett & Yuan Minn, A Lawyer\’s guide to working in China (July 26 2020, 4:48 pm) https://www.kwm.com/en/knowledge/insights/a-lawyers-guide-to-working-in-china-20171113
[iv] Jane Player, Claire Morel de Westgaver, Privilege in international arbitration (July 15 2020, 12:55 pm), https://www.twobirds.com/en/news/articles/2012/privilege-and-prejudice.
[v] Richard M. Mosk & Tom Ginsburg, Evidentiary Privileges in International Arbitration, The International and Comparative Law Quarterly 50(2), 345 346 (2001) https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=1648&context=law_and_economics
[vi] Anna Magdalena Kubalczyk, Evidentiary Rules in International Arbitration – A Comparative Analysis of Approaches and the Need for Regulation, 3(1) GroJIL, 85, 96 (2015).
[vii] Jane Player, Claire Morel de Westgaver, Privilege in international arbitration, (July 15 2020, 12:55 pm), https://www.twobirds.com/en/news/articles/2012/privilege-and-prejudice.
[viii] Fed. R. Civ. P. 26
[ix] Claudia Salomon and Sandra Friedrich, Witnesses, Subpoenas, Documents and the Relationship Between the FAA and State Law, in International Arbitration in the United States 317, 322 (Laurence Shore , et al. eds, Kluwer Law International; Kluwer Law International 2017); Heather L. Heindel, Third-Party Document Discovery in Arbitration? Do Not Count On It., (July 15 2020, 2:00 pm), https://www.americanbar.org/groups/construction_industry/publications/under_construction/2018/fall/discovery-in-arbitration/
[x] Gabrielle Kaufmann-Kohler and Philippe Bärtsch, Discovery in international arbitration: How much is too much?, 2 (1) SchiedsVZ, 13, 13 (2004).
[xi] Ibid.
[xii] International Bar Association (IBA), Commentary on the revised text of the 2010 IBA Rules on the Taking of Evidence in International Arbitration, at 8 (May 01 2011), https://www.ibanet.org/Publications/DRI_online_May2011.aspx#4
[xiii] International Bar Association (IBA), Rules on Taking Evidence in International Arbitrations, 2010, at 3(3) (May 29 2010), https://www.ibanet.org/Publications/publications_IBA_guides_and_free_materials.aspx
[xiv] International Bar Association (IBA), Commentary on the revised text of the 2010 IBA Rules on the Taking of Evidence in International Arbitration, at 8 (May 01 2011), https://www.ibanet.org/Publications/DRI_online_May2011.aspx#4
[xv] Technical know-how buyer P v Engineer/seller A, Final Award, ICC Case No. 7626, 1995, in International Council of Commercial Arbitration, Yearbook Commercial Arbitration- Volume XXII, 132-148 (Albert Jan Van den Berg et al. eds. Kluwer Law International) (1997)
[xvi] International Institute for Conflict Prevention and Resolution, CPR Non-Administered Arbitration Rules, at 12(2) (March 1, 2018), https://www.cpradr.org/resource-center/rules/arbitration/non-administered/2018-cpr-non-administered-arbitration-rules
[xvii] International Trade Center, International Arbitration Rules of Zurich Chamber of Commerce (1989), at 38, http://www.intracen.org/International-Arbitration-Rules-of-Zurich-Chamber-of-Commerce-1989/