New International Evidence Rules
Advance Arbitration Process

The International Bar Association's new "Rules on the Taking of Evidence in International Commerical Arbitration" address how evidence is collected and presented in international arbitration proceedings. The rules reflect how arbitration is practiced today, pave the way toward harmonizing differing legal cultures, and delocalize business-based legal proceedings worldwide.

by Terry F. Peppard

rbitration daily assumes an ever larger role in resolving legal disputes the world over. The trend is driven by concerns over economic and temporal costs, and by considerations of privacy, informality, and flexibility, and, particularly in the context of valuable business relationships, the desire, where possible, to maintain them.

The London-based International Bar Association (IBA) recently took a significant step toward making disparate legal cultures more hospitable to businesses and their legal advisers by revising, for the first time since their initial release in 1983, its rules of evidence for international commercial arbitration. The IBA is the world's largest membership-based legal organization, with nearly 175 member bar associations and legal societies and about 18,000 individual members.

The new rules, called the "IBA Rules on the Taking of Evidence in International Commercial Arbitration," address the collection and presentation of evidence in international arbitration proceedings. As importantly, they reflect the way arbitration is practiced today¹ and promise to pave the way for further efforts toward harmonizing differing legal regimes and "delocalizing"² business-based legal proceedings worldwide.

This article discusses the new rules' important implications for Wisconsin business lawyers, litigators, international law practitioners, and arbitrators.

Avoiding the Home Court Advantage

The appeal of arbitration in international settings is enhanced by the perception that it's almost always best for a party from one country not to take a dispute with a business partner from another country into the latter's national court system. The fear is that each country's courts exhibit their own cultural and legal biases, so that the foreign party who submits to such a system risks falling victim to a "home court advantage."

The solution for international businesses and their legal advisers has long been to write a predispute arbitration clause into contracts with foreign business partners. This tendency has become so strong that perhaps 80 percent of all international business agreements in force today contain such a clause.

Answering One Question, Raising Others

Of course, choosing arbitration does not answer all questions. Indeed it raises others, including selection of the rules by which the arbitral proceedings will be conducted. This question has been addressed most often either by resort to an institutional approach to arbitral administration under systems sponsored by such organizations as the American Arbitration Association,³ or instead by reliance on a set of ad hoc rules like those sanctioned by the United Nations Commission on International Trade Law (the UNCITRAL Rules).

Whichever of these paths is chosen, however, it remains a challenge for lawyers involved in the arbitration of international commercial disputes to reconcile the methods and perspectives of diverse legal cultures at the point of collecting and presenting evidence for a trial-type hearing, a domain largely left open in the most frequently employed institutional and ad hoc systems.⁴

A Clash of Legal Cultures

The clash of arbitral legal cultures has been played out most prominently between the common law practices of jurisdictions like the United States and the United Kingdom, on the one hand, and the civil code approaches of France and most other countries on the European continent.

The issues thus exposed range across the spectrum of pre-hearing and hearing procedure. Among them: What is the role of the parties' pleadings? May discovery depositions be taken? Should witnesses testify under oath? May witnesses be crossexamined by counsel? Perhaps not surprisingly, the common law and civil code disciplines have long had separate answers to these and other fundamental questions of arbitration practice.

For civil code adherents, the emphasis has been on detailed written submissions rather than the spare notice pleadings and extensive oral presentations prevalent in common law regimes. Likewise, civil code proceedings have been characterized by the relative absence of American-style discovery. And advocates in civil code settings have shied away from the swearing of witnesses and been uncomfortable with the aggressive cross-examination prevalent in common law jurisdictions.

An Early Solution: The 1983 IBA Rules

Realizing the difficulties presented by this clash of cultures, the IBA sought in 1983 to bridge the gap between them with its publication of "Supplementary Rules Governing the Presentation and Reception of Evidence in International Commercial Arbitration."⁵

Perhaps consistent with their status as a first effort at "harmonization" of international arbitration practice methods, the 1983 rules were very brief, containing only seven short articles. They also were quite general in their terms, leaving to the discretion of the appointed arbitrator(s) some of the most troubling issues that might arise either before or at a hearing on the merits.

Nonetheless, the 1983 rules broke ground. Among other things, they opted for extensive speaking pleadings over their notice counterparts.⁶ They also limited discovery to the production of documents relied upon by each party and the unsworn written statements of each side's own witnesses.⁷ Moreover, they did not require witnesses at hearing to be sworn.⁸ These were important concessions to the civil code tradition.

Balancing these provisions, the 1983 rules permitted cross-examination of witnesses essentially on the common law model.⁹ They also provided that a party might be heard in support of his own case,¹⁰ a practice not permitted in some civil code traditions. And, in a concession to American practice, they allowed pre-hearing interviews of witnesses,¹¹ a procedure not then followed in Britain.

To encourage the widest possible acceptance of the 1983 rules, the rules allowed the parties to an international commercial arbitration to adopt them in whole or in part, or with modifications, to meet the peculiar needs of any case.¹²

Working Party Revisions

The 1983 IBA rules have been used and cited only sparingly over the 16 years since their adoption. In the meanwhile, much has happened in the world of dispute resolution, and especially in international commercial arbitration. So it was not surprising that the IBA, working through its Business Law Section and the section's Committee on Arbitration and ADR, recently commissioned a "working party" to recommend revisions to the rules to reflect current practice. The membership of the working party was drawn from the committee's approximately 1,500 members in 115 countries.¹³

The working party, composed of 16 section members, represented nine almost exclusively European legal systems. France, with four members of the working party, had particularly strong representation. The common law tradition was represented by one member from the U.S. and two from the U.K. Only one member of the working party, one from formerly British Hong Kong, arguably represented a non-European tradition.¹⁴

Still the working party has been credited with producing in the new rules "a reliable guide to international norms of procedural fairness."¹⁵

Coming of Age: The New IBA Rules

The 1999 rules, which may be identified simply as the "IBA Rules of Evidence," are intended to replace entirely their 1983 predecessors.¹⁶ And, like the 1983 rules, the new rules are designed to be used in conjunction with either institutional or ad hoc rules of arbitration procedure, and may be employed in whole or in part or with modifications.¹⁷ The new rules were adopted, in nine detailed articles, by resolution of the IBA Council at its meeting in Boston on June 1, 1999.

Arbitration Pleadings Under the New Rules

Unlike the 1983 rules, the new rules are silent on the topic of arbitration pleadings. The IBA thus has left this subject to be governed by the institutional and ad hoc rules that the evidence rules are intended to supplement.¹⁸ One implication of this choice is that the longstanding importance of detailed pleadings and of full documentation of arbitration claims at the point of pleadings is intended to remain.

Limits of Discovery

As regards pre-hearing discovery, the Preamble to the 1999 rules recites that an underlying premise of the drafters is that:

"The taking of evidence shall be conducted on the principle that each Party shall be entitled to know, reasonably in advance of any Evidentiary Hearing, the evidence on which the other Party relies."¹⁹

Because no mention is made in this proviso of evidence on which an inquiring party might wish to rely, it stands as an implicit rejection of the expansive American approach to pre-hearing discovery, a carryover from the 1983 rules.²⁰

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