Document Production in International Arbitration in Germany – a smoking gun or puff of smoke?
This is the first article in Clyde & Co’s international arbitration series covering document production in international arbitration. In this piece, senior associate Scott Wightman from our London office provides the English law perspective.
In domestic litigation in England and Wales, the parties’ obligations in respect of the disclosure of documents is governed by strict rules of evidence and civil procedure. Broadly, under the English Civil Procedure Rules a party is required to disclose all documents that are in support of its own case but also those that could support the opponent’s. Disclosure, or document production as it is better known in international arbitration, is noticeably different.
This is primarily because document production is not mandatory in either commercial or investment treaty arbitration, and there is no universally recognised set of procedural rules that prescribe the parties’ disclosure obligations. In English arbitrations, the parties can agree whether there should be disclosure and, if so, the scope of it. However, in the absence of any agreement, tribunals seated in England & Wales tribunals are afforded a wide degree of discretion under the Arbitration Act 1996 (AA 1996) as regards the scope of any disclosure and applicable procedure.
Historically the English courts had the power to intervene in arbitrations to assist the disclosure process, including to order document production and interrogatories. However, since the introduction of the AA 1996, tribunals seated in England and Wales are afforded a broad discretion and are not bound to apply any concept of national law with respect to the document production process, unless the parties agree otherwise. The AA 1996 devolves issues concerning evidence and procedure to the tribunal. For example, Section 34(2)(d), provides that:
“it shall be for the Tribunal to decide all procedural and evidential matters, subject to the right of the parties to agree any matter. Procedural and evidential matters include [among other things] whether any and if so which documents or classes of documents should be disclosed between and produced by the parties and at what stage.”
This is not to say, however, that tribunals have unfettered freedom in exercising their discretion on matters of procedure and evidence. Tribunals must still adhere to the general duty under section 33 of the AA 1996 to conduct the arbitration fairly, and to give each party "a reasonable opportunity of putting its case and dealing with that of his opponent". In doing so they are to "adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense". Moreover, the tribunal's general discretion is subject to the overarching principle of party autonomy enshrined by the AA 1996, allowing the parties the freedom to agree on the rules of disclosure that are to be applied.
Under AA 1996 it remains open for a party, with permission from the tribunal or the agreement of the other parties, to apply to the English courts for an order requiring the attendance of a witness in the United Kingdom to give oral testimony or to produce documents (Section 43(1), AA 1996). In this respect, it will be necessary for the requesting party to identify clearly the documents required so that there can be no doubt as to what is to be produced (Tajik Aluminium Plant v Hydro Aluminium AS and others  1 WLR 767). The court will also consider whether the documents are necessary in order to dispose of the claim or to save costs (Council of the Borough of South Tyneside v Wickes Building Supplies Ltd  EWHC 2428 (Comm)).
In practice, the scope of document production is usually more limited than the disclosure required in English court proceedings. In English arbitrations the parties typically agree to adopt the International Bar Association’s Rules on Taking of Evidence in International Arbitration (IBA Rules) which sit between the wide disclosure generally permitted in common law courts (such as those of England or the USA) and the far more limited document production orders granted in civil law courts (such as those of France and Germany).
The IBA Rules “are intended to provide an efficient, economical and fair process for the taking of evidence in international arbitrations, particularly those between Parties from different legal traditions. They are designed to supplement the legal provisions and the institutional, ad hoc or other rules that apply to the conduct of the arbitration” (IBA Rules, Preamble, No. 1). They adopt what is often seen as a bridge between the common law and civil law traditions in that disclosure of documents is permitted where it is “relevant to the case and material to its outcome” (Article 3(3)(b)). The parties therefore tend to disclose the documents they intend to rely on but also request the disclosure of limited categories of documents from the opposing party.
Unlike English court proceedings in which disclosure is broadly provided after statements of case (pleadings) have been served, in arbitration a document production phase typically will take place after the first exchange of submissions between the parties, on the basis that there are usually two exchanges of submissions. Many parties find this approach beneficial as it allows the tribunal to be able to rule on contested document production requests having first had the opportunity to understand the case and parties’ respective positions by virtue of the first round of submissions. This approach also comes with the advantage that it allows each party to address in the second round of submissions the documents obtained from the opposing party during the document production phase.
An issue which can often lead to disagreement between the parties is a concept that is familiar to any English legal professional, namely client-advocate confidentiality, otherwise known as privilege. This is particularly acute when the parties come from competing legal backgrounds, as concepts of privilege vary greatly across jurisdictions, in particular between common law and civil law traditions. The AA 1996 does not directly address how a tribunal should determine the issue of privilege, thereby affording tribunals great flexibility in determining the applicable privilege rules in the event of a dispute. Similarly, the IBA Rules do not provide guidance on how an arbitral tribunal might determine which national privilege rules to apply (IBA Rules Art 9(2)(b)). However, they do allow a tribunal to take into account the expectations of the parties when balancing the conflicting understandings of parties from different legal traditions.
Document production nearly always features in international arbitration processes and, as is the case in England and Wales, it is common for national laws to afford tribunals wide discretion as to what is expected of the parties in terms of evidence and procedure. Absent agreement between the parties regarding the production of documents, a tribunal is best advised to make provision for this element of procedure (including potentially difficult issues such as the scope of privilege) at the outset of the proceedings as part of its general duty to manage the case fairly and efficiently. Ideally, it will address the issue at the time of the terms of reference or the initial procedural order, especially when faced with parties and counsel from differing legal backgrounds.
This series will continue next week with the French perspective on document production in international arbitration.
 Standard disclosure, English Civil Procedure Rule 31.6, provides requires each party to disclose “(a) the documents on which he relies; and (b) the documents which – (i) adversely affect his own case; (ii) adversely affect another party’s case; or (iii) support another party’s case; and (c) the documents which he is required to disclose by a relevant practice direction.” Even under the disclosure pilot scheme, which operates in many parts of the English High Court, “known adverse documents” have to be disclosed by each party regardless of the kind of disclosure ordered (Practice Direction 51U paragraph 3.1(2).