Good faith, bad faith, but not losing faith: a commentary on the 2010 IBA Rules on the Taking of Evidence in International Arbitration.

Author:Martinez-Fraga, Pedro J.
Position:International Bar Association

TABLE OF CONTENTS I. INTRODUCTION II. CONSULTATION AND SELF-DISCLOSURE IN ARTICLE 2: HARMONIZING TRADITIONS AND THE APPLICATION OF PERSUASIVE AUTHORITY A. Article 2 of the Rules and the Effort to Strike a Balance B. The Influence of the Federal Rules of Civil Procedure III. REVISITING STANDARDS AND DEFINITIONS: AN INQUIRY INTO MEANING AND CONSISTENCY IN THE NEW IDA RULES A. The "Relevant to the Case and Material to its Outcome" Standard B. The Need for Further Definition: "Relevance" and "Materiality" IV. A NEW STANDARD OF GOOD FAITH: AT LEAST A GOOD FAITH EFFORT TOWARDS h STANDARD A. Introducing (and Interpreting) Good Faith B. ReliaStar and the Rules' Good Faith Requirement: Twins or Perhaps Strangers IV. REVISITING THE INHERENT AUTHORITY OF ARBITRATORS TO IMPOSE SANCTIONS IN THE FORM OF ATTORNEY'S FEES AND COSTS AS A PUNITIVE MEASURE ARISING FROM AN ABSENCE OF GOOD FAITH A. Jurisprudence From the Ninth and Eleventh Circuits cited by the Second Circuit in ReliaStar Does Not Support the Court's Novel Holding B. In Reliastar, the Court Erroneously Conceptualizes the Terms "Remedies" and "Punitive Sanctions" as well as "Arbitrator" and "Judge" V. TRANSPARENCY AS A STEP TOWARDS DEFINING GOOD FAITH IN THE TAKING OF EVIDENCE IN INTERNATIONAL ARBITRATION A. Non-Disclosure of Requested Documents B. Use and Access of Original Documents C. Expert Witnesses D. Understanding Transparency and its Application in Different Contexts VI. CONCLUSION "Le bon sens est la chose du monde la mieux partagee" (1)

Rene Descartes

Discours de La Methode


    Despite considerable developments in the field of international economic law, (2) economic globalization is yet to witness the creation of its legal counterpart: juridical globalization. Particularly in the field of transnational contentions, the taking of evidence remains one of the most salient challenges in the formation and transformation of an international dispute resolution rubric. Although the chasm separating common and civil law judicial cultures, legacies, and traditions on this issue might appear unbridgeable at first, the imperative to harmonize disparate precepts and policies concerning the taking of evidence between these starkly different legal systems is underscored by economic globalization.

    International arbitration, both commercial and treaty-based, has served as a temporal bridge until transnational tribunals of civil procedure have become capable of exercising jurisdiction for purposes of adjudicating commercial disputes in private and public international law. (3) This centrality underscores the need to harmonize conflicting and often inimical procedural tenets concerning common and civil law jurisdictions. Common law practitioners in the United States in particular seem critical of a civil law "taking of evidence" tradition that, viewed through the prism of American "discovery" procedural precepts, wrests all party-autonomy from the litigants and vests primary responsibility with the tribunal. (4) In contrast, civil law academics, jurists, and lawyers cannot fathom normative strictures that impel the production of documents and the disclosure of information that is relevant "to the subject matter involved in the action," where "relevance" is defined as "information [that] need not be admissible at the trial [or final hearing] if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." (5) The gradual resolution of these stark differences, a daunting task, has begun through the evolution of international arbitration.

    On May 29, 2010, the International Bar Association (IBA) published a new edition of its rules that aspires "to provide an efficient, economical and fair process for the taking of evidence in international arbitrations, particularly those between Parties from different legal traditions." (6) These new rules benefit from twenty-seven years of experience arising from the practice and commentaries concerning the IBA Supplementary Rules Governing the Presentation and Reception of Evidence in International Commercial Arbitration (May 28, 1983), (7) and the IBA Rules on the Taking of Evidence in International Commercial Arbitration (June 1, 1999). (8) The 2010 IBA Rules on the Taking of Evidence in International Arbitration (Rules) represent an important effort to synthesize fundamental common and civil law concerns. (9) In large measure, they are successful as an embryonic point of departure.

    The new rules adhere to the basic structure of a preamble, definitions, and nine articles each with their relevant sub-parts. Several new provisions reflect very meaningful and mostly positive changes. It is beyond the scope of this Article to engage in a running exegesis that canvasses the contours of all, or even most, of these material changes. Instead, this Article will limit itself to analyzing four narrow, but technically significant, "amendments" or "changes" to the predecessor regime that inevitably raise the question of the extent to which the rules have been "americanized" rather than "internationalized." Particular attention will be directed at fundamental issues such as the consultation and self-disclosure requirements, or the new introduction of a "good faith" standard. Do these changes alter the fundamental relationship between the virtually sacrosanct principles of party-autonomy, uniformity, predictability, and transparency of standard, as they interface with the scope of an arbitral tribunal's inherent authority? Do the Rules contain discernible principles that may cause their perfect workings where parties and arbitrators alike are steeped in disparate legal cultures and traditions? Are such terms as "good faith," "best efforts," and "genuine belief' susceptible to a uniform construction irrespective of applicable substantive law and the confluence of different and at times contrasting legal systems? What can it possibly mean to conduct the taking of evidence in good faith for purposes of the Rules?

    This analysis shall comprise five distinct sections. First, it will focus on the self-disclosure and consultation requirements set forth in Article 2 of the Rules. (10) Article 2 will be analyzed with specific emphasis on the expected role of party-autonomy that this provision contemplates. Second, the new "standards" that pervade the Rules will be identified in connection with party-autonomy and their relation to the self-disclosure and transparency requirements that this third-generation of rules embodies. Here, two specific concepts will be highlighted: (i) the talisman "relevant to the case and material to its outcome," standard (11) and (ii) "good faith" in the conduct of the taking of evidence requirement. (12) The third section will explore the normative foundation for a "good faith" standard within the Rules' architecture. The fourth section will revisit the inherent authority of an arbitral tribunal to impose sanctions in the form of attorney's fees and costs arising from a lack of good faith in the conduct of the taking of evidence. The fifth and final section will suggest that the principle of "transparency" as promulgated by the Rules in its treatment of document disclosure and grounds for non-production, expert witnesses and expert reports, and access to original exemplars of translated iterations, may prove to be a meaningful point of departure towards arriving at a substantive definition of good faith that may be inferred from the Rules' internal workings.


    1. Article 2 of the Rules and the Effort to Strike a Balance

      Article 2 of the Rules is the only article that is new in its entirety. Quite notably, Article 2, paragraph 1 poses an obligation in the mandatory "shall" on the arbitral tribunal to assist in implementing party-autonomy on the parties so that they may "consult" and presumably agree on "an efficient, economical and fair process for the taking of evidence." (13) In effect, the explicit command codifies the tacit but implicit practice of emphasizing both agreement and efficiencies in the taking of evidence through party-autonomy. The article quite artfully strikes a balance between the very direct and immediate participation of tribunals in civil law judicial cultures and the party-autonomy initiatives endemic to U.S. and continental common law adversarial systems. The "consultative" component certainly provides for an opportunity for parties from different legal traditions to discuss competing expectations in the taking of evidence. In addition, the mandatory shall stands in very sharp relief with the permissive "is encouraged" norm in paragraph 3 of the same article. (14)

      Article 2, paragraph 2(b) tends to underscore the influence of common law advocacy by referencing "the taking of testimony at any Evidentiary Hearing," forcing the parties "at the earliest appropriate time in the proceedings" to consider the use of direct, cross, and redirect examination, issues that all too often may cause delay and controversy. (15) Even though this Article does not compel the taking of oral testimony, (16) its suggestion as a discussion point in this subsection at minimum identifies it as a reasonable methodology that, if agreed to early in the proceeding, may facilitate the conduct of evidentiary and final hearings. Article 2 further enhances the likelihood of agreement or stipulation on (i) witness statements, (ii) expert reports, (iii) procedures pertaining to the production of documents, and (iv) confidentiality, by raising the possibility of discussing the scope, timing, and manner of the taking of such evidence. (17)

      Standing in sharp contrast to paragraph 2 of this article, paragraph 3 merely states that the "Arbitral Tribunal is encouraged to identify to the Parties, as soon as it considers it to be appropriate," any issues that the arbitral tribunal...

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