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Document production in arbitration – is it all worth it?

Berwin Leighton Paisner’s (BLP) third annual arbitration survey indicates that most arbitration users feel that document production adds significant delay and cost to the process, yet rarely contributes much to the outcome of the arbitration. It also indicates that tribunals and parties are struggling to get to grips with e-disclosure, and that tribunals are often not up to speed on the issues when hearing document production applications.

In light of this, should we simply do away with document disclosure and accept that it may, in certain circumstances, be possible and indeed appropriate to get to the right answer without this extensive trawl through the documents? After all, the adjudication of construction disputes typically operates on this basis and more often than not results in an outcome that the parties choose to live with as the final determination.

The process of compelling parties to disclose relevant documents to the other party sounds perfectly sensible to common law lawyers, but many civil law lawyers see it as unnecessarily intrusive. However, it is common in international arbitrations to adopt the IBA rules on the taking of evidence in international commercial arbitration, which require requests for specific classes of documents to be justified by reference to particular issues in dispute.

This is a compromise between the extremes of common law disclosure and the civil law approach (where there is often no compulsory disclosure). BLP’s survey showed that a large majority of respondents were happy to adopt the IBA rules and most felt there was the right amount of disclosure in international arbitrations. But if you think this means everyone is happy with the status quo, you’d be wrong.

BLP survey results

Almost two-thirds of respondents said that document production always or frequently adds significantly to the cost of the arbitration; while a third agreed it did sometimes. Similar proportions of respondents said that document production sometimes or always adds to delays in the arbitration process. Furthermore, only a fifth of respondents said that their opponent’s document production had contributed significantly to a favourable outcome for their client in 50% or more of their arbitrations. Almost half the respondents said that document production had a significant contribution in less than 25% of cases, and a fifth said that it had a significant impact on the arbitration in less than 10% of cases.

Putting those statistics together, most respondents felt that the process of document production does not significantly assist their clients in the majority of arbitrations, but it does significantly add to the costs and causes delay. That indicates to me that, whatever the respondents felt about there being the right amount of document production in arbitrations and the efficacy of the IBA rules, something is wrong. The process causes delay and increases costs, but does not really improve your client’s chances of winning a case. A good test of whether a system works is whether “the benefits of doing this outweigh the drawbacks?”. These responses indicate that for document production in arbitrations, the answer is “no”.

The problems

The reason that document production might not throw up significantly useful documents could be because e-disclosure (the process of searching and producing copies of electronically generated and stored documents)  in international arbitration seems to lag some way behind English litigation. The Civil Procedure Rules (CPR), court forms and guides contain a number of rules and protocols on agreeing the scope of searches that parties must carry out for electronic documents. However:

  • Less than a quarter of respondents to BLP’s survey said that they always or frequently meet their opponent to discuss and agree e-disclosure parameters.
  • 29% said they rarely or never meet their opponent
  • 25% said they had no experience of e-document production at all.
  • 26% of respondents said that in their experience, the tribunal rarely or never ordered or encouraged the parties to discuss e-disclosure.

Another factor might be because tribunals aren’t up to speed with the issues when document production applications are made, so they cannot make properly informed decisions on what should be produced:

  • Very few (only 7%) of respondents felt that arbitrators where sufficiently familiar with the merits of the matter to be able to give a properly informed decision on a document production request.
  • 41% of respondents said that arbitrators were only sometimes, or never, sufficiently well informed to be able to make a decision.
  • Interestingly, 83% of respondents said that they or their opponents sometimes use the process of document production as an opportunity to argue the merits of a case.

A cynic might suggest this is grandstanding by the solicitors, but arguing the merits in support of a document production request might help the tribunal get to grips with the key issues. It might even clarify and narrow the issues for the parties, such that there is a greater chance of early settlement.

I think part of the problem is that both clients and lawyers (especially those of us from a common law background) like the rigour of the document production process – it removes the doubt that your opponent is hiding something. However, in most cases there simply isn’t a “smoking gun” hidden in your opponent’s documents. Even if there is something relatively damning, it is hardly ever determinative. For example, an internal email in which a manager admits to his boss that it was his fault that the goods didn’t get delivered is proof only that an employee with no legal training, and perhaps without all the background facts, has jumped to a conclusion that he was at fault for failing to deliver goods. It is not proof of his employer’s legal liability for damages for a breach of contract arising out of that failure. But do we, as a body of arbitration users, want to sacrifice the quest for the truth – and, perhaps, a sense that justice is being done – to achieve greater speed and less cost?

Our experience shows that there is value in a properly and efficiently managed document review process in many cases, particularly where the dispute is of a very technical nature and the evidence can really only be ascertained by contemporaneous documents rather simple witness recollection or retrospective expert evidence given in isolation of such documents. The lesson to be learned, it seems to me, is that as a process it has the potential to delay the arbitral outcome and significantly add to costs without bringing any clear benefit. Our job and indeed the tribunal’s must be to determine when and to what extent document review is warranted on any given dispute, to achieve balance between costs, delay and efficacy.

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