December 5, 2021

T-Break

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Global Arbitration Review – The Guide to Evidence in International Arbitration

Introduction

Even in a country where one would think the meaning of ‘love’ would be self-evident, a French poet, Pierre Reverdy, once said, ‘there is no love; there are only proofs of love’. The word ‘evidence’, which is derived from the Latin evidentia, meaning ‘that which is obvious’, can either be a verb or a noun (i.e., ‘to render evident’ or ‘that which makes evident’). The persuasive power of facts is underscored by the words of John Adams, who once described them as ‘stubborn things’ that cannot be altered ‘whatever may be our wishes, our inclinations, or the dictates of our passion’.

There is no uniform or universal definition of evidence. Many countries do not provide a precise or single definition in their legislation; for those countries that do, the definitions provided are distinct but similar. For example, under the Criminal Procedure Law of the People’s Republic of China, evidence is simply said to be ‘all material that can be used to prove the facts of the case’, whereas in Spain, pursuant to Article 281.1 of the Spanish Civil Procedure Act, the purpose of evidence is to establish the facts that are related to the legal position that each party intends to maintain in legal proceedings. In a slightly different manner, under the Evidence Act of Singapore, evidence is defined as oral evidence (all statements that the court permits or requires to be made before it by witnesses in relation to matters of fact under enquiry) and documentary evidence (all documents produced for the inspection of the court). Therefore, though some countries may not specifically define evidence, they do list the different types.

Generally, the different types of evidence detailed within national legislation – with exceptions such as New York – can be divided into two main groups: oral evidence and documentary evidence. Additional types of evidence are recognised within certain jurisdictions, such as hearsay evidence, physical evidence and presumptions.

The main objective of evidence – of any type – is the pursuit of the truth. In Germany, this objective is set out clearly in Section 286, paragraph 1 of the German Code of Civil Procedure, which provides that ‘the court shall, taking into account the entire content of the proceedings and the result of any taking of evidence, freely decide whether a factual allegation is to be considered true or not true’. The law in the United Arab Emirates (UAE) refers to evidence that is ‘useful to reveal the truth’. This provision also aligns with the French position, which considers that evidence is a mechanism to bring truth to light, albeit a relative truth. Singapore law also recognises the objective of the pursuit of truth, subject to the caveat that there is no guarantee of absolute truth. In consideration of the constant evolution of the common law of evidence, former Chief Judge of the New York Court of Appeals Stanley Fuld offered that ‘[a]bsent some strong public policy or a clear act of pre-emption by the Legislature, rules of evidence should be fashioned to further, not frustrate, the truth-finding function of the courts’.

This chapter first addresses the general rules and requirements of evidence across various legal cultures, including France, Germany, Spain, England and Wales, the UAE, the People’s Republic of China, Hong Kong, Singapore and the United States (notably New York), then provides an analysis of evidence in international arbitration.

General rules and requirements of evidence across legal cultures

Probative value of different types of evidence

The question of whether oral evidence or documentary evidence is of a higher probative value depends on the jurisdiction. Nevertheless, it should be noted that most often the probative value of any given element of evidence is subject to the discretion of the judge (or judges) or jury hearing the case. For example, in China, the court is expected to examine the evidence comprehensively and objectively, and examine the relevance, legality, authenticity and probative force of the evidence using logical reasoning and rules of daily life, in accordance with the law. Documentary evidence, in some jurisdictions, has the advantage of holding a certain value under the law, meaning it does not require the judge’s conviction, known as ‘assessed evidence’. This is the case in Spain. Article 319 of the Spanish Civil Procedure Act states that public documents, court rulings and certifications of registry are the only means of proof considered to be ‘assessed evidence’. In other words, these documents constitute full proof of the facts they document. In France, documentary evidence is also considered the most common, persuasive and practical type of evidence. In cases in the UAE, when the amount in dispute exceeds 5,000 dirhams or is indeterminate, witness testimony may not be relied on to establish the existence or negation of a fact. A similar principle is found in France, such that if the sum or value exceeds an amount fixed by decree, the juridical act must be signed and in writing in order to be proved. The probative value of witness testimony may also depend on the nature of the proceedings. In contrast with criminal proceedings in France, it is uncommon for witnesses to appear in civil proceedings and, if they do, the evidence is unlikely to be afforded much weight.

Burden and standard of proof

The legal burden refers to the obligation on a party to establish a fact in issue. On a basic level, the notion that each party must prove its own allegations is universal. To provide an example from France, the party who claims a debt must prove that it is the creditor. Thus, this party must prove that the debt exists, together with its nature and content. If the existence of the obligation is established, then the other party is tasked with proving either that payment was made or that the obligation to pay was extinguished. Similar rules exist in the UAE, Spain and Germany.

In England and Wales, Singapore and Hong Kong, the law distinguishes between the legal and evidential burdens of proof. In the United States, the evidential burden is called the ‘burden of production’. In a civil action, the party who desires that the court give judgment as to a legal right or liability (the plaintiff) bears this burden throughout the proceedings. The evidential burden, however, may shift: once the plaintiff has adduced some evidence to prove the facts asserted, the evidential burden shifts to the counterparty (the defendant) to adduce evidence in rebuttal. If the defendant fails adequately to do so, the court may conclude that the legal burden is discharged and, consequently, make a finding of fact against the defendant.

The standard of proof refers to the degree of evidence and level of certainty necessary to establish a fact in dispute. In the aforementioned common law jurisdictions, the standard of proof to be applied in criminal and civil proceedings is different. In civil proceedings, the plaintiff must prove the issue on the ‘balance of probabilities’. In criminal cases, the prosecution must prove guilt ‘beyond a reasonable doubt’. Doctrinal sources in civil law jurisdictions, by contrast, do not differentiate between the standards of proof to be applied in civil and criminal proceedings; however, in practice, judges tend to apply a standard that is similar to ‘preponderance of the evidence’.

Exceptions to standard rules on the burden of proof

As discussed above, the burden of proof may shift from the party who originally bears this obligation to the other party. In France, this can result from a statutory presumption or an exception based in case law, which may allow the relevant party to produce other converging factual elements and circumstances (faisceau d’indices) to establish a certain fact. In Germany, the burden of proof may be reversed in specific cases identified by case law (e.g., producer’s liability) or if a party in possession of the evidence destroys or withholds it. German courts also apply a modified burden of proof to overcome the challenge of proving the non-existence of facts, as opposed to proving a fact positively. Similarly, statutory and common law presumptions exist under Singapore law, for example, relating to the authenticity of signatures and handwriting in the case of a document that is more than 30 years old, or the accuracy of an electronic record provided that certain conditions are met.

In Spain, for example, the Spanish Civil Procedure Act provides for exceptions in the presence of admitted, notorious or presumed facts. In China, there are specific rules depending on the subject matter of the case; for example, in patent infringement and in tort litigation involving environmental pollution, ultrahazardous materials or domestic animals. Similarly, UAE law provides for exceptions in relation to the forgery of customary and official documents and liquidated damages. In civil cases, different rules may also be applied depending on the seriousness of the allegation, the consequences of the allegation or the subject matter of the case. For example, courts in England and Wales apply different rules on the burden of proof in committal proceedings, commercial fraud claims and applications for anti-suit injunctions.

Obtaining evidence outside a party’s possession and scope of discovery

Each jurisdiction has its own procedure and practice when a party seeks to obtain evidence outside its possession or control. Expectations also differ as to the scope of the document production itself. Whereas in some jurisdictions parties are accustomed to limited or no discovery, in others the requesting party is able to cast a wide net.

A party may seek to obtain evidence outside its possession or control using various methods. In Singapore, for example, there are three types of discovery: pre-action, general and specific. The court will only order pre-action discovery to identify possible parties to the proceedings or when the requesting party needs to ascertain whether it has a viable claim at all. Regardless of the type, the scope of documents to be produced during discovery is rather limited and is subject to the overarching requirement that the evidence must be necessary for disposing fairly of the matter or for saving costs. In England and Wales, parties to civil proceedings are most commonly subject to ‘standard disclosure’, which has a relatively broad scope and requires the disclosure of documents on which they rely, that adversely affect their own case or another party’s case, and that support another party’s case. Under Practice Direction 51U of the Civil Procedure Rules, which began on 1 January 2019, the business and property courts are currently testing a new disclosure regime under which disclosure is split into ‘initial disclosure’ and ‘extended disclosure’. Whereas initial disclosure is understood to cover the key documents, extended disclosure requires the parties to agree on a list of issues and choose which of the five models of disclosure is to be applied to each one. The most restrictive is Model A, which requires disclosure only of known adverse documents. At the other end of the spectrum is Model E, which permits wide search-based disclosure, and may be used in exceptional cases.

Discovery and document production are also affected by the form of evidence that is sought. In e-discovery, the nature of the evidence, such that it exists in electronic format, does not mean that it is not ‘discoverable’ or cannot be disclosed or produced. However, difficulties may arise, as listed in the Sedona Principles, in relation to the volume and duplicity of the evidence, metadata, changeable content, among other things. In the United States, Federal Rules ensure that e-discovery issues are addressed early in the proceedings. Another specific feature of US evidence-gathering is the deposition, which is an oral interrogation of a witness, prior to a hearing, who will testify for the opposing party. As explored in the subsection titled ‘Role of the parties and the tribunal in taking evidence’, below, depositions are of limited importance in international arbitration.

By contrast, civil law jurisdictions generally do not impose disclosure obligations on the parties. Some variations exist, however, such as in Spain, where there is a duty to exhibit specific documents. A similar rule exists in Germany, though it is applied cautiously, such that production of certain documents may be required in consideration of their purpose and content. Generally, a party may also request, through the courts, the production of documents from the other party or third parties. In addition, in French civil proceedings, if evidence is at risk of being destroyed, a party may file an application before a judge known as a ‘référé 145’ to thwart any destruction.

Admissibility and assessment of evidence

To varying extents, nearly all the jurisdictions surveyed consider ‘relevance’ as one of the key criteria to the determination of whether evidence is admissible. For example, in Singapore, evidence will be admitted only if it is a fact in issue (direct evidence) or if it is relevant to the fact sought to be proved (indirect evidence). In civil proceedings in the United Kingdom and Hong Kong, relevance is required for the admissibility of evidence, and relevant evidence will be admissible in civil proceedings unless it falls within an exclusionary rule of law or is excluded by the court in the exercise of discretion. To be relevant, evidence need not necessarily prove or disprove a fact in issue, but must assist in doing so.

In Spain, evidence must be useful, relevant and legal to be admissible in proceedings. Under German law, which requires that the evidence offered be exhausted, there are a limited number of narrow grounds on which to reject a request for evidence. By contrast, the admissibility of evidence in the UAE is not affected by its potential relevance or materiality (or the lack thereof). The default position is that evidence is admissible unless its authenticity is challenged by the opponent or is called into question by the court. Nevertheless, the underlying facts for which evidence is presented must be ‘related to the case, productive and acceptable’.

Whereas evidence that is material is necessarily relevant, evidence that is relevant may not necessarily be material. The criterion of ‘materiality’ can therefore be understood as setting a higher bar (i.e., that the evidence in question goes to facts or issues that can affect the outcome of the case). Neither Singapore nor France requires that evidence be material to be admissible. By contrast, Rule 401 of the US Federal Rules of Evidence appears to require that evidence be both relevant and material, such that the evidence must have a ‘tendency to make a fact more or less probable than it would be without the evidence; and [be] of consequence in determining the action’.

Regarding oral testimony more specifically, judges and arbitrators must also be cognisant of the largely inevitable fallibility of human memory, as explored in a recent report by the International Chamber of Commerce that incorporates insight from psychologists with expertise in human memory. Although acknowledging the potential shortcomings of human memory, the report stressed the value and importance of witness testimony and proposed steps to maximise its reliability. For example, in preparing for a hearing and during the hearing itself, witnesses should be reminded to distinguish between post-event information, such as what they have read or learned from others, and the facts or events that they remember. The tribunal is thus better able to assess the reliability of the testimony that is presented.

Exclusion of evidence

Beyond the relevance of the evidence in question, jurisdictions apply different rules that might lead to the exclusion of evidence. Besides these rules, judges have broad discretion to decide on evidentiary matters and exclude legally admissible evidence. By way of example, common law jurisdictions generally consider that hearsay evidence is inadmissible, but the rules changed drastically in the United Kingdom with the Civil Evidence Act of 1995. Beyond implementing several safeguards to protect the other party against any unfair prejudice that may arise, the Act permits the admission of hearsay evidence provided it meets the general rules on admissibility.

By way of contrast with the United Kingdom and New York, Singapore adopts an inclusionary, rather than exclusionary, approach by prescribing circumstances in which evidence should be admissible, rather than inadmissible. For example, hearsay evidence will be admissible if it is an entry or memorandum in books kept in the ordinary course of one’s occupation, or where parties to the proceedings mutually agree that the statement may be given.

Evidence falling under legal profession privilege may also be excluded. This includes both litigation privilege (or, in the United States, the doctrine of work-product) and legal advice privilege (known as attorney–client privilege in the United States). These types of privilege do not exist in the UAE, for example, and in France and Spain, they are encompassed within the obligation of lawyers to respect professional secrecy.

Evidence obtained illegally or improperly, such as through a cyberattack, is also handled differently depending on the seat. Many jurisdictions, including Spain and China, consider such evidence to be inadmissible. A court may determine that such evidence is to be excluded if its prejudicial effect outweighs its probative value, as in Singapore and Hong Kong, or if there is an unlawful encroachment on the constitutionally protected rights of the individual (i.e., human dignity and personality rights), as in Germany.

In Hong Kong, courts focus on ensuring a fair trial. As part of what could be considered a more permissive approach, courts in England and Wales have admitted evidence obtained by unlawful hacking as well as covert recordings. However, a court may exercise its discretion to exclude such evidence, usually on the grounds of the public interest in discouraging the conduct involved and in consideration of human rights, such as the right to privacy and the right to a fair trial.

One area that raises novel evidentiary questions is the internet of things and, more specifically, the collection and use of its data. These issues were the subject of recent debate in Singapore, for example, in the context of the use by the government of a series of digital contact tracing systems to curb the spread of covid-19. In early 2021, it was disclosed that such data could also be used for police investigations, which prompted an urgent Bill to amend existing legislation. The Bill clarified that the use of contact tracing data would be limited to criminal investigations in respect of serious offences and also implemented additional safeguards, such as the deletion of all personal contact tracing data following the end of the covid-19 crisis.

Role of state judges in taking evidence

The role of state judges in the taking of evidence varies from one jurisdiction to the next. Although parties in civil proceedings in most, if not all, jurisdictions, assume a leading role and guide this process, the role of the judge may vary. In Spain, the taking of evidence in civil proceedings is subject to the ‘dispositive principle’, whereby the courts are to decide based on the evidence introduced by the parties. In New York, a certain degree of judicial intervention is permitted in the presentation of evidence; however, ‘the line is crossed when the judge takes on either the function or appearance of an advocate at trial’. In China, judges have the right to conduct ex officio investigation and collect evidence, therefore acting as inquisitor in the process of taking evidence. In Germany, where there is a principle of party publicity, the parties have the right to be informed of the court’s taking of evidence and to inspect the court’s files.

In an adversarial system, as is found in the United Kingdom and Singapore, judges assume a primarily supervisory role. This is also true of civil proceedings in France, in which parties are actively involved in the evidentiary process. As a result, all parties to the proceedings must, under the judge’s supervision, search for the elements of proof that are relevant to the case and assist the judiciary in this process. In this respect, although there is no right to or duty of discovery, ‘civil factfinding comes closer to the Anglo-American style, in which the court supervises rather than participates in proof-taking activity’. The adoption in France of the new Code of Civil Procedure has meant, however, that French judges have taken on a more significant role in ensuring the proper conduct of the proceedings; for example, they may order any measure of enquiry that might be relevant for the outcome of the case. This evolution has been viewed as a move towards a more inquisitorial system for civil matters, much like the current approach in criminal matters. It would seem, however, that the jurisdictions surveyed do not necessarily fit neatly into the category of ‘adversarial’ as opposed to ‘inquisitorial’; many encompass aspects of both.

Evidence in international arbitration: a melting pot of legal cultures

Moving from a national jurisdiction to the sphere of international arbitration requires the parties to embrace a certain degree of flexibility and willingness to compromise. Though parties may enter a dispute with their respective expectations as to the approach that will be taken on evidentiary issues, it is unlikely that either party will have the option of importing all or even some of the rules and principles of evidence to which they may be accustomed. Generally, arbitrators are not bound by national regimes governing evidence, such as in Singapore, where Section 2(1) of the Evidence Act expressly states as such. Nonetheless, in accordance with the principle of party autonomy, parties in international arbitration are free to agree on the applicable rules of evidence, such that many of the aspects explored in the section above covering general rules and requirements of evidence invariably arise in the arbitral realm. Furthermore, the key principles underlying a fair trial, such as the equality of arms and the right to be heard, are not only closely tied to evidentiary issues but are also found in arbitration.

Effects of soft law (IBA Rules and Prague Rules)

Most lex arbitri and arbitral rules do not provide extensive information about taking evidence for arbitral proceedings. Nevertheless, regardless of the applicable law in the arbitral proceedings or the applicable arbitration rules, certain principles and rules relating to evidence are often applied. These principles and rules can be found in the International Bar Association’s Rules on the Taking of Evidence in International Arbitration (the IBA Rules) and the Rules on the Efficient Conduct of Proceedings in International Arbitration (the Prague Rules).

The IBA Rules are intended to provide ‘an efficient, economical and fair process for the taking of evidence in international arbitrations, particularly those between [p]arties from different legal traditions’. The aim of the IBA Rules was therefore to ‘bridge the gap between common law and civil law traditions of taking evidence’. The parties to an arbitration may either adopt the IBA Rules, whether in whole or in part, or decide that the IBA Rules will serve as guidelines for them to develop their own tailor-made procedure.

Similarly, the aim of the Prague Rules, launched in December 2018, is to provide guidance for the efficient conduct of international arbitration proceedings and, therefore, they also cover issues of evidence. The Prague Rules, like the IBA Rules, are intended to supplement institutional rules; they can be applied in a binding manner or as guidelines. One of the goals of the drafting of the Prague Rules was to address the perception that the IBA Rules lean towards the common law tradition. The Prague Rules were therefore drafted to tackle both the voluminous nature of document production under adversarial systems and the inefficiencies involved in oral testimony, including the examination of witnesses. By contrast, the Prague Rules propose a less adversarial approach regarding document production, fact witnesses and party-appointed experts.

As in civil proceedings before national courts, each party to an arbitration has the burden of proof with respect to the facts necessary to establish its claims or defences and, therefore, is required to produce the evidence on which it relies. To prove the law, the burden of proof is also on the parties. The principle of jura novit curia (the court knows the law) that originates from national court proceedings, however, also applies, which serves to expand the role of the tribunal in the evidentiary process. This principle is reflected in the Prague Rules, pursuant to which the tribunal may apply legal provisions not pleaded by the parties if deemed necessary. The power is also recognised in the case law and national legislations of other jurisdictions. For example, the Paris Court of Appeal found, in a 1997 decision, that ‘the arbitrators, who had to decide “in conformity of French substantive laws” had the obligation to inquire, to apply the adequate rule of law, the true legal nature of the agreement of which the conditions of execution they had to study’. Depending in part on the arbitral seat, the tribunal may even have the power to compel a witness within the control of a party to appear by issuing an order that may then be supported by a national court. This is the case in England and Wales, which is reflected in the Arbitration Act: ‘It shall be for the tribunal to decide all procedural and evidential matters, subject to the right of the parties to agree any matter.’ These matters include ‘whether and to what extent the tribunal should itself take the initiative in ascertaining the facts and the law’. Additionally, state judges may be called on to compel the production of evidence before an arbitral tribunal by way of mechanisms such as Section 28 US Code 1782 in the United States or, in France, through a judge (juge de la preuve) to obtain, for example, a document from a third party.

Role of the parties and the tribunal in taking evidence

One of the most significant advantages of arbitration is party autonomy and flexibility. Parties are offered the flexibility to devise the procedures best suited to their case and can select the rules of evidence they wish to apply. For example, given their importance in the United States, US parties may decide to add to their arbitration clauses that depositions shall be allowed in the arbitral proceedings as part of evidence-gathering.

As discussed above, the IBA Rules and the Prague Rules are the two available sources of rules of evidence for arbitral proceedings and parties can choose to apply all or part of them. Indeed, the tribunal also has broad discretion to decide on evidentiary matters. This principle is reflected, for example, in the UK Arbitration Act, which empowers the tribunal to decide ‘whether to apply strict rules of evidence (or any other rules as to the admissibility, relevance or weight of any material (oral, written or other) sought to be tendered on any matters of fact or opinion’.

The main differences between the two sets of rules concern the degree to which the arbitral tribunal may have an active role in taking evidence. For example, these rules have divergent approaches as to the reliance on fact and expert witnesses, electronic documents (e-discovery) and the scope of document production.

Under the IBA Rules, the parties have a virtually unlimited right to introduce fact witnesses, with the presumption that each of these witnesses will be cross-examined. By comparison, the tribunal has a more significant role under the Prague Rules, as it decides which witnesses to call for examination, with cross-examination permitted only if the tribunal so decides. However, the IBA Rules do provide in Article 8.2 that ‘the Arbitral Tribunal shall at all times have complete control over the Evidentiary Hearing’. Under the IBA Rules, expert witnesses may be appointed by the parties or by the tribunal. By contrast, the Prague Rules emphasise the authority of the tribunal to appoint the expert.

Regardless of the rules selected by the parties, or if no such rules are adopted, the tribunal is necessarily tasked with evaluating the evidential weight of evidence. The broad scope of this discretion can be found in Article 9.1 of the IBA Rules, which states that the arbitral tribunal ‘shall determine the admissibility, relevance, materiality and weight of evidence’. Taking electronic documents as a specific example, neither the Prague Rules nor the IBA Rules suggest that the probative value of electronic documents, including electronic exchanges and e-signatures, is to be assessed any differently from hard copies. Though the parties may agree or the tribunal may decide otherwise, the parties are encouraged to submit documents ‘in the form [that is] most convenient or economical’. Although generally against e-discovery, the Prague Rules, unlike the IBA Rules, do not address the form of submission or production of documents. Despite this apparent proscription in the Prague Rules, e-discovery is sometimes used in arbitral proceedings, with different guidelines having been published and certain arbitration rules addressing the issue directly.

With regard to document production, the IBA Rules more readily embrace this process, even where broad. As explained above, parties from certain common law jurisdictions, particularly the United States, are more likely to expect broad document production than parties from civil law jurisdictions. Parties may also have different expectations as to the documents that are protected from disclosure, notably based on privilege. The Prague Rules, on the other hand, aim to limit document production while emphasising the importance of the relevance and materiality of the documents in the interest of efficiency. Therefore, depending on whether the parties agree to adopt the Prague Rules or the IBA Rules, and the nature of that consent, the arbitral tribunal may be involved more or less actively in taking evidence.

Conclusion

This chapter has sought to bridge the divide between the general rules and requirements of evidence across legal cultures and the approach to evidence in international arbitration. Although the jurisdictions covered each have their own approaches to these various evidentiary issues, there are indeed multiple points of convergence. As such, when parties, counsel and arbitrators from different jurisdictions come together in a single dispute, each may have differing views as to the ‘best’ approach. However, practice has shown that these differences are not insurmountable, particularly with the development of the Prague Rules and the IBA Rules, which aim to coalesce these various national approaches.


Notes