Making evidence processes more efficient in arbitration

A report published earlier this year by the International Chamber of Commerce (the ICC) Commission on Arbitration and ADR, and a subsequent study by the School of International Arbitration at Queen Mary University of London (QMUL) in partnership with Pinsent Masons, have identified areas for improvement as to the management of issues and claims.

Maximising the efficiency of arbitration proceedings is a central theme in both the report and the study, and there is scope to improve efficiency across the whole process, from the selection of the arbitral tribunal, to the conduct of the arbitration itself – including how the tribunal manages issues and claims, evidence, and submissions and hearings – and the issuance of the arbitral award.

Here we explore the challenges in managing evidence in international arbitration and how this can be done more efficiently.

For international construction arbitrations, more so than with other types of international arbitration, the volume of evidence can be tremendous. It will often prove challenging for the arbitral tribunal and parties to manage effectively. This difficulty is well recognised by arbitration participants. The QMUL survey found that large amounts of evidence is third among the features perceived by respondents as making international construction arbitration inefficient.

Document disclosure

Approaches to document disclosure can vary quite widely and, as noted in the ICC Commission's report, the legal background of each member of the arbitral tribunal is likely to influence how this process will be managed. A civil law approach generally favours limited disclosure in arbitration proceedings.

The Rules on the Efficient Conduct of Proceedings in International Arbitration, known as the 'Prague Rules', prepared by a working group composed of representatives from around thirty, mainly civil law, countries, expressly encourage the arbitral tribunal and parties to avoid document production unless a party considers that such disclosure would be needed.

A common law approach, on the other hand, is traditionally open to more extensive disclosure. Still, very few arbitrators within the current international arbitration community, regardless of legal background, are inclined to sanction adopting the full bounds of the common law discovery process.

Taking this into account, the ICC Commission does not advocate for one management style over another for arbitrations in the construction industry. Instead, its report emphasises the deployment of recommended tools for the arbitral tribunal to use in helping to define and better manage the document disclosure process.

This emphasis appears to address the concerns of participants who, on the whole, do not appear prepared to dispense with document disclosure entirely. QMUL survey respondents were asked to indicate what elements of due process they would be prepared to forgo in order to save time and money in international construction arbitrations. Document production / disclosure was ranked sixth, behind other elements relating to submissions and witness evidence. Still, this reflects that about a third of the respondents are prepared to do away with document disclosure, while others have confirmed that they would accept more limited disclosure. 

Some of the survey respondents who were subsequently interviewed by QMUL also suggested appointing one member of the arbitral tribunal to deal specifically with the parties on matters concerning electronic disclosure, such as on agreed search terms and using a common platform for disclosure.

This is indicative of a broader trend among both institutions and participants towards a controlled and targeted approach to the document disclosure process overall.

Experts

On the subject of expert evidence, the ICC Commission considers the possible use of party-appointed experts and tribunal-appointed experts, as well as the use of a tribunal member's own expertise, in construction industry arbitrations, setting out helpful guidance for improving each approach.

Although the use of tribunal-appointed experts may be beneficial in certain circumstances, it does not appear that such an approach garners widespread favour among participants as of yet.

The ability to engage party-appointed experts is one of the main advantages of choosing arbitration over litigation recognised by some QMUL survey respondents and only a relatively small proportion of them are prepared to forgo this element of due process in international construction arbitrations to save time and money. Further, when the topic of tribunal-appointed experts was explored in interviews, some respondents expressed their concern that the decision-making process of the arbitral tribunal should not be perceived to have been delegated to a tribunal-appointed expert. The ICC Commission addressed this topic in its report by recommending that the arbitral tribunal make clear that it will not be bound by the opinion of a tribunal-appointed expert.

Regardless of whether party-appointed or tribunal-appointed experts are preferred, there appears to be a common value placed by the institution and participants alike on the clarity of expert evidence in achieving more efficient international construction arbitrations.

The recommendations provided in the ICC Commission's report include practical tools for ensuring greater clarity in the context of experts generally and, in particular, their evidence, from early on in the proceedings. For example, it is recommended that the arbitral tribunal consult with the parties regarding the scope of the expert evidence to be presented and, if appropriate, draw up terms of reference of the experts or request the parties to agree a statement setting out the issues, facts and documents in respect of which expert evidence is required. The report also recommends the preparation of joint expert reports which identify the points which have not been agreed and the reasons for the experts' differences in opinion on those points.

Clarity of expert evidence was also revealed by the QMUL survey to have a perceived impact on the efficiency of international construction arbitrations from the viewpoint of participants.  Unclear expert evidence was identified by nearly a third of respondents as one factor that makes such arbitrations inefficient and was ranked sixth out of 23 potential causes of inefficiency.

The survey further explored perceptions among participants as to the characteristics of an efficient expert in an international construction arbitration. The top four characteristics selected appear to reflect the apparent sentiment among participants that the improved clarity of the expression of expert issues would improve efficiency. In order of preference, the top four characteristics selected were clearly and simply addressing technical issues, focusing on the key issues, identifying areas of agreement and disagreement with other experts and the ability to distil issues.

Like the ICC Commission, participants also appear to appreciate the benefits for efficiency of addressing expert matters early on. The survey results demonstrate a broad consensus among respondents interviewed that the engagement of experts at an early stage will likely result in a better understanding of the case and greater clarity of evidence.

Claim value

In its report, the ICC Commission briefly addresses the computation of claims, recognising that a clear indication of the quantum involved can go some way towards enabling the parties to reach a settlement as to all or part of the dispute. With this in mind, the report recommends that the arbitral tribunal invite the parties early on to jointly establish, if possible, an accurate computation of claims. This would assist both parties in improving their understanding of the real possibility of recovery in dollar terms.

To facilitate this, the ICC Commission suggests that evidence justifying the amounts claimed be produced by the claimant, to the extent not already provided in the statement of case or prior to the proceedings, with appropriate cross-references and format such that the respondent and arbitral tribunal can understand how the amounts are derived.

It appears from the QMUL survey that participants also perceive claim value to have an impact on efficiency and that there are advantages to the parties turning their minds to claim value at an early stage of the proceedings. The handling of low value or simple claims was the fourth most selected aspect of arbitral procedure which survey respondents believe offers the greatest potential to improve efficiency in international construction arbitrations. 

Most survey respondents considered that an international construction dispute with a minimum claim value of between $1m and $10m would be commercially sensible to pursue through arbitration. However, the majority of respondents who serve as in-house counsel considered that the minimum claim value would need to be significantly higher, between $11m and $25m, for it to be commercially sensible to pursue that claim in arbitration.

The QMUL study also found that many of the participants interviewed felt that the value of a dispute would likely inform core procedural choices and perceptions of what would be an efficient process for the resolution of an international construction arbitration. Consistent with the recommendations in the ICC Commission's report, it was suggested in interviews that, to improve efficiency, the arbitral tribunal could order parties to provide information at an early stage, for example to particularise the quantum claimed.