In international arbitration, litigants commonly come from very different legal systems. When a French company retains counsel in the United States to initiate an international arbitration against a government or company in Asia, what evidentiary and procedural rules should govern the parties’ dispute? Most commonly, the answer is the Rules on the Taking of Evidence in International Arbitration issued by the International Bar Association (IBA). The IBA Rules on the Taking of Evidence provides parties and arbitral tribunals from diverse legal backgrounds with uniform guidelines that seek to harmonize evidentiary and procedural principles of both civil law and common law jurisdictions so that the taking of evidence is fair, economical, and efficient.1
In February 2021, the IBA revised and updated the Rules on the Taking of Evidence for the first time since 2010 (Revised 2020 IBA Rules). As the COVID-19 pandemic forced international arbitration proceedings to take place remotely and in virtual settings, the IBA 2020 Review Task Force amended the rules to reflect some newly adopted best practices from the last year.2 As a result, the Revised 2020 IBA Rules include some significant changes that will have an effect on the time and costs of arbitrations that apply them.3
Cybersecurity and Data Protection Issues
The Revised 2020 IBA Rules acknowledge that international arbitrations have become, in many cases, increasingly complex. The “document production”4 phase has grown in importance, and production of electronic documents is now quite common. The Revised 2020 IBA Rules thus encourage the parties to consult at an early stage on these matters. One specific update encourages the parties to consult and agree to parameters for the “treatment of any issues of cybersecurity and data protection.” This can be crucial when sensitive personal or business confidential information is exchanged with an adversarial party; procedures must be put in place to protect this electronic information. Early consultation may also prevent disputes later in the proceeding.
To assist this consultation, the 2020 Review Task Force advises tribunals and parties to turn to different protocols and roadmaps that can provide guidance.5 The ICCA-IBA Draft Roadmap to Data Protection in International Arbitration (ICCA-IBA Draft Roadmap) is one such example that was submitted in draft form for public comment in February 2020. It explains, first, that participation in an international arbitration does not minimize the arbitral participants’ general obligations under the data protection laws that apply to them.6 Thus, parties must be aware of their own data privacy obligations and ensure that they uphold those obligations. This might require using data-complaint privacy notices, minimizing the personal data they process, adopting data security measures, and implementing data breach procedures and data retention policies.7 Identifying where problems might arise over the course of the arbitration and crafting solutions with counsel and opposing litigants during early consultation stages will set clear expectations from the outset, saving potential costs and problems down the road.
Given the nature of the COVID-19 pandemic, remote hearings have been the only opportunity to present and test evidence through oral examination and cross-examination. The Revised 2020 IBA Rules acknowledge that remote hearings may present both challenges and opportunities even when the more traditional in-person hearings may safely resume. Article 8.2 allows the tribunal to order that the evidentiary hearing be conducted as a remote hearing. The tribunal must then consult with the parties to establish a remote hearing protocol that addresses several issues, including (1) the technology to be used; (2) advanced testing of the technology or training; (3) starting and ending times, considering varying time zones; (4) how documents may be placed before a witness; and (5) measures to ensure that witnesses giving testimony are not distracted or improperly influenced.8
Negotiating and preparing the terms of this protocol will certainly consume additional time, and remote hearings may raise challenges. For example, varying time zones may decrease the available amount of time during the day to hold the hearing, and complications may arise to ensure that witness testimony is not improperly influenced. However, remote hearings may also decrease many of the other costs of evidentiary hearings, for example travel expenses for witnesses, experts, party representatives, and their counsel and administration fees charged by arbitral institutions, including expenses for hearing-room spaces. As participants grow more comfortable with remote hearings, these may become increasingly common, requiring participants to adapt.
The Revised 2020 IBA Rules also adjust how witnesses may present their testimony during the evidentiary hearing. Previously, a witness statement or an expert report generally would serve as the direct testimony of the witness or expert.9 However, Article 8.5 of the Revised 2020 IBA Rules provides that the “Arbitral Tribunal may nevertheless permit further oral direct testimony,” even where the witness or expert has presented written testimony.10 The practical effect of this modification is that the party who submitted a witness statement or expert report may now call that witness to give direct testimony, even if the opposing party waives its right to cross-examine that witness during the evidentiary hearing.11 This rule change may also lead to the arbitral tribunal conducting the direct examination of the witness, as is common in civil law jurisdictions, followed by questioning from the parties.12 This will be an important change for determining hearing strategy — a party that wishes to avoid a witness or expert presenting testimony orally at the hearing may no longer be able to do so.
Exclusion of illegally obtained evidence
Finally, Article 9.3 of the Revised 2020 IBA Rules introduces a controversial new aspect. According to the new provision, the “Arbitral Tribunal may, at the request of a Party or on its own motion, exclude evidence obtained illegally.”13 Although Article 9.3 does not specify what an “illegally obtained” piece of evidence entails, the IBA 2020 Review Task Force provides an example: a recorded conversation in a country where recording conversations without the consent of those involved is prohibited.14 It may also extend to evidence that a government obtains in violation of its own domestic law, for example an illegal seizure.
However, there is no clear consensus on the scope or application of this provision. Domestic laws vary on whether illegally obtained evidence should be excluded from civil and criminal proceedings, and they necessarily vary as to what constitutes illegally obtained evidence.15 Hence, the commentary simply mentions some of the elements that arbitral tribunals have considered when assessing whether to exclude illegally obtained evidence, for example whether the party offering the evidence was involved in the illegality; considerations of proportionality and whether the evidence is material and outcome determinative; whether the evidence has entered the public domain through leaks; and the severity of the illegality.16
Even though the IBA 2020 Rules include additional modifications to other aspects of the process for the taking of evidence in international arbitrations, the provisions on cybersecurity, data protection, remote hearings, direct testimony, and exclusion of illegally obtained evidence will be a recurring subject of discussion in arbitrations governed by those rules. Hence, parties to international arbitrations governed by the IBA 2020 Rules must be aware of the implications that these amendments may have on the time and costs of arbitral proceedings, including the benefits and setbacks they might pose to their advocacy strategies.
1 IBA Rules on the Taking of Evidence in International Arbitration, December 17, 2020 (IBA 2020 Rules), Preamble, 1.
2 Commentary on the revised text of the 2020 IBA Rules on the Taking of Evidence in International Arbitration, p. 25.
3 IBA Rules 2020, Art. 1.2.
4 IBA Rules 2020, Arts. 2.1, 2.2(e).
5 Commentary on the revised text of the 2020 IBA Rules on the Taking of Evidence in International Arbitration, p. 6.
6 ICCA-IBA Draft Roadmap to Data Protection in International Arbitration, p. 4, at https://cdn.arbitration-icca.org/s3fs-public/document/media_document/roadmap_28.02.20.pdf.
7 ICCA-IBA Draft Roadmap to Data Protection in International Arbitration, p. 4, at https://cdn.arbitration-icca.org/s3fs-public/document/media_document/roadmap_28.02.20.pdf.
8 IBA Rules 2020, Art. 8.2.
9 IBA Rules on the Taking of Evidence in International Arbitration, May 29, 2010, Art. 8.5.
10 IBA Rules 2020, Art. 8.5.
11 Commentary on the revised text of the 2020 IBA Rules on the Taking of Evidence in International Arbitration, p. 27.
12 Commentary on the revised text of the 2020 IBA Rules on the Taking of Evidence in International Arbitration, p. 27.
13 IBA Rules 2020, Art. 9.3.
14 Commentary on the revised text of the 2020 IBA Rules on the Taking of Evidence in International Arbitration, p. 30.
15 Commentary on the revised text of the 2020 IBA Rules on the Taking of Evidence in International Arbitration, p. 30.
16 Commentary on the revised text of the 2020 IBA Rules on the Taking of Evidence in International Arbitration, p. 30-31.