Show me your Cards! – The clash of common and continental law approaches to discovery in international arbitration.
07. 06. 2023
How to Navigate Common Law Style Disclosure in International Arbitration.
The growing importance of arbitration as a preferred dispute resolution method for international parties has allowed different legal traditions to interact more frequently and perhaps flexibly than before, resulting in a mixing of legal theories and a ‘cross-pollination’ of concepts. This article zones in on one such concept, disclosure (or discovery), an originally English procedural tool that has made its way into international arbitration practice and is popping up in continental law jurisdictions as well. This interaction of laws will be demonstrated through the examples of Hungarian and English law rules on disclosure, and some guidance will be provided to those from continental legal backgrounds on how to navigate this common law concept.
In common law jurisdictions, disclosure (or discovery, as it is called in the United States) is an early procedural step requiring parties to a dispute to disclose and permit inspection of documents that may be reasonably relevant to the proceedings. This obligation stands, regardless of whether the evidence shared assists the disclosing party’s case or harms it, and is further supplemented by allowing parties to make document production (disclosure) requests to the other side. Disclosure is rooted in the idea that dispute resolution in this legal tradition takes an open, ‘cards on the table’ approach. Generally, the main objectives of the practice are to allow parties to assess the relative strengths of their cases, expose inaccuracies in the parties’ positions, encourage settlement or speed up the litigation process, and narrow the scope of the contested issues.
Due to the practice’s efficient and non-adversarial nature, English-style disclosure has become commonplace in international arbitration. The IBA Rules on the Taking of Evidence adopt a concept that strongly echoes the English regime, requiring parties to submit all documents they rely upon (Article 3(1)), and readily allowing for document production requests to be made (Article 3(2)). Various arbitration institutions have adopted provisions in a similar spirit. By way of example, under the 2021 ICC Rules (Article 22(1)and Appendix IV), as well as the 2017 SCC Rules (Article 31), a tribunal may require the parties to disclose the documentation relied upon and may grant requests for document production.
Standing in contrast to the English approach, in civil law systems, disclosure obligations are understood more narrowly, as it is generally within the control of the parties to curate what facts and evidence they wish to introduce. At the same time, aspects of the English approach have somewhat imprinted on these systems, as observable for example in Hungarian civil procedure.
Thus, under Hungarian civil procedure rules (Act CXXX of on the Civil Procedure Code) litigation proceedings are broken into two phases, a preparatory and a substantive phase, where the preparatory phase is primarily reserved for the resolution of evidentiary matters. Thus, pursuant to the principle of the effective conduct of proceedings, parties shall submit the evidence they intend to rely upon in the preparatory phase, or as soon as possible. This feature is reminiscent of the ‘cards on the table’ approach of common law systems.
On the other hand, the scope of such disclosure obligation is considerably narrower than under common law. While parties are expected to conduct themselves with integrity and cooperate in the effective conduct of the proceedings, the law does not call for all reasonably relevant documents to be disclosed.
Additionally, while courts do have the power to order document production, such orders are narrower in their application and are treated as exceptional remedies, if at all granted. One such example is where one party has made reasonable efforts to acquire from the other party an essential document known to be in their possession, however, the other party has withheld such evidence (Civil Procedure Code Section 265(a)). An exceptional disclosure order may also be granted when, for the lack of documentation, one party is unable to prove a claim, however, the other party can be reasonably expected to (attempt to) disprove such claim (Civil Procedure Code Section 265(b)).
It is thus apparent that some features of English-style disclosure can be found in civil law systems, however, other features may still seem foreign. For this reason, this article has gathered a few points to help navigate the situation, through the example of the procedure used in England and Wales.
Sources of law: For most litigations taking place before the courts of England and Wales, provisions on disclosure may be found in Part 31 of the Civil Procedure Rules (“CPR”), and guidance for electronic disclosure is set out in the adjacent Practice Direction 31B.
Timing: Generally, disclosure first occurs at the initial phase of the litigation, however, as this is an ongoing obligation, parties shall continue to disclose relevant documents until the proceedings are concluded.
Meaning of “documents”: While the pool of potentially disclosable materials is referred to as “documents”, these pieces of evidence may take any form of recorded information, such as emails, texts, photographs, data, etc.
Scope: The extent of the disclosure obligation depends on the type of the case (e.g., its complexity or the amount in dispute), as well as party agreement, and the direction of the court. Courts are empowered under the CPR to make specific disclosure requests, or even dispense with the obligation altogether. Generally, a party shall disclose documents of reasonable relevance to the matter, the documents it relies upon, and documents which may affect its case, or the other party’s case adversely. Before disclosure is made, the parties shall also undertake a reasonable search, to uncover all documents falling within the aforementioned (or otherwise prescribed) criteria.
Inspection: Disclosure refers to informing the other party of the existence of a document; inspection grants the other party access to the document. Inspection of documents may be contested on the grounds of privilege (e.g., legal advice, common interest privilege) or in protection of the public interest.
While the above rules of English litigation are not directly transposable to international arbitrations, they may inform the thinking of document production/discovery of arbitrators with a common law background. More generally, while specific arbitration rules and tribunal practices will inevitably vary, familiarising oneself with the English law concept of disclosure may assist parties to international arbitrations navigate the situation better.