The Revision of the IBA Rules on the Taking of Evidence in International Arbitration: Catching Up With Reality

On 15 February 2021, the International Bar Association (the IBA) released its updated Rules on the Taking of Evidence in International Arbitration (the IBA Rules or the Rules).  The updated Rules were adopted on 17 December 2020 and will apply to all arbitrations in which the parties agree to apply the IBA Rules after that date.^[1]

The update to the IBA Rules thus follows hot on the heels of the revised arbitration rules from the London Court of International Arbitration (the LCIA) of 1 October 2020^[2] and those of the International Chamber of Commerce (the ICC) released on 1 December 2020 and in force since 1 January 2021.^[3] In the meantime, on 1 March 2021, the International Centre for Dispute Resolution (ICDR), the international division of the American Arbitration Association (AAA) also updated its rules.^[4]

Since their first formulation dating back to 1983, the IBA Rules have undergone two previous updates in 1999 and 2010, to become the foremost opt-in rules for the taking of evidence in international arbitration proceedings in practice today. They contain procedures initially developed in both civil law/common law systems, and in international arbitration processes themselves, and are generally designed to assist parties in determining what procedures to use in their particular cases.^[5] As with the flexible nature of international arbitration, parties and tribunals may decide to apply the IBA Rules in whole or in part or simply refer to them as guidelines (as it is often the case, in particular, in arbitrations with civil law background).

The latest process for renewal of the IBA Rules was sparked by the approval of the Report on the Reception of the IBA Soft Law Products^[6] in September of 2016, which recommended a revision of the Rules in 2020.  A 2020 Review Task Force (the Task Force), consisting of more than 30 members from both civil- and common-law backgrounds, was mandated to update the rules and ensure their continued alignment with evolving best practice.

In the spring of 2020, the Task Force submitted the proposed changes for comment and feedback to over 160 arbitration institutions worldwide, as well as the IBA Arbitration Committee, and the drafters of the 1999 and 2010 Rules.^[7] The result of this extensive review process might conjure the proverbial image of a mountain that birthed a mouse, as the Task Force recommended only a limited number of changes, mostly to ensure greater clarity. ^[8] Yet, in doing so, the 2020 Task Force has paid clear homage to the maxim "if it is not broken, do not fix it", but catching up with reality can do no harm.^[9]

The 2020 update to the IBA Rules introduces only three new issues: (i) an express reference in Article 2 to issues of cybersecurity and data protection in the list of issues that the initial consultation on evidentiary issues may address; (ii) an express provision addressing the possibility of and framework for remote hearings; and (iii) a provision in Article 9 making it express that the arbitral tribunal may exclude evidence obtained illegally.

In addition, the 2020 update contains substantive changes to sections on the production of documents, in particular the updates to Sections 3.12(d) and (e), concerning the translation of different types of documents. Similar efficiency-minded clarifications have been added to sections on the testimony of witnesses and experts offering additional/responsive statements, highlighted in updates at Sections 4.6(b) and 5.3(b). Thus, while there was some speculation as to whether and how the promulgation of the “Prague Rules” on the Efficient Conduct of Proceedings in International Arbitration in December 2018 would affect the IBA Rules, it does not appear to have sparked significant changes, if any. 

We will now discuss the changes of the 2020 IBA Rules in more detail.

1. Cybersecurity and Data Protection

Article 2.2(e) "The consultation on evidentiary issues may address the scope, timing and manner of the taking of evidence, including, to the extent applicable: the treatment of any issues of cybersecurity and data protection"

Due to the international and high-stakes nature of international arbitration, disputes often involve confidential and sometimes highly sensitive material, be it for example in telecom, gas pricing, or IP-related disputes. Advancements in legal technology have enabled parties to transition more of the proceedings (especially the sharing of submissions and exhibits) online.  This insertion thus reflects developments in technology-related issues, particularly in national and international data protection such as the GDPR implemented in May 2018. It is thus no surprise that concerns of cybersecurity and data protection have become increasingly prevalent for users and practitioners wishing to safeguard their interests. However, this topic is still frequently neglected by parties and tribunals. Article 2(e) therefore serves as a reminder to the tribunal and the parties to discuss matters of cybersecurity and data protection at the outset of the proceedings.  These discussions may include, for example, the parties’ agreement to comply with, for example, the GDPR only or to extend agreement to compliance with all applicable data protection regimes. 

2. Remote Hearings

Article 8.2 “At the request of a Party or on its own motion, the Arbitral Tribunal may, after consultation with the Parties, order that the Evidentiary Hearing be conducted as a Remote Hearing. In that event, the Arbitral Tribunal shall consult with the Parties with a view to establishing a Remote Hearing protocol to conduct the Remote Hearing efficiently, fairly and, to the extent possible, without unintended interruptions. The protocol may address:

(a) the technology to be used;

(b) advance testing of the technology or training in use of the technology;

(c) the starting and ending times considering, in particular, the time zones in which participants will be located;

(d) how Documents may be placed before a witness or the Arbitral Tribunal; and

(e) measures to ensure that witnesses giving oral testimony are not improperly influenced or distracted."

Article 8.2 expressly permits the tribunal to order that a hearing take place remotely on its own motion but like in the case of the updated ICC Rules, LCIA and ICDR Rules^[10] only upon consultation with the Parties.

It would be tempting, but in the authors’ view remiss, to ascribe the introduction of the term “remote hearing” into the IBA Rules exclusively to the Covid-19 pandemic. A trend to remote hearings, within the very broad definition used in the IBA Rules i.e., “a hearing conducted, for the entire hearing or parts thereof, or only with respect to certain participants, using teleconference, videoconference or other communication technology by which persons in more than one location simultaneously participate”, was discernable well in advance of the 2020 health crisis, which was of course a forceful catalyst still. But the level of detail reflected in Article 8.2 as to the remote hearing protocol is more properly viewed as a testament to the fact that virtual hearings, whether through teleconference or videoconference and which at least in part span more than one location, have for the time being become the rule rather than the exception. The detailed list of specific issues to be considered when establishing a remote hearing protocol is certainly very useful as practitioners are still becoming accustomed to these logistical and technological challenges.^[11]   

3. Illegally Obtained Evidence

Article 9.3 “The Arbitral Tribunal may, at the request of a Party or on its own motion, exclude evidence obtained illegally."

It is generally understood that in international arbitration, tribunals are the gatekeepers to the record and decide on what can and cannot be submitted into evidence. In the updated IBA Rules, the Task Force has for the first time given the tribunal express power to exclude any evidence it considers illegally obtained; on its own motion or on the request of a party.

While the Commentary provides no further insight as to the reasons for including this provision, it points out that the IBA Rules bestow discretion in that tribunals “may” exclude such evidence, whereas tribunals “shall” exclude evidence for the reasons listed in Article 9.2.  This addition raises several issues that the parties would need to consider should they adopt the IBA Rules in whole or in part, particularly the treatment of tainted evidence in the relevant jurisdiction and the relative position of the parties vis-à-vis the evidence at issue in the arbitration proceedings. 

For example, the IBA Rules do not define when evidence was "obtained illegally", as this differs by jurisdiction, and thus requires a case-by-case analysis. As there is no uniform or even general standard for the determination of whether evidence has been obtained illegally, complications may arise both under the lex arbitri, i.e. the primary jurisdiction, as well as at the place of enforcement, the secondary jurisdiction. 

Particularly in investor-state disputes the question may be raised whether the legality of the evidence should indeed be controlled by the law of the country where e.g. a conversation was recorded, as the Commentary suggests,^[12] if that country is also the State party, or whether the tribunal should not also consider e.g. the law at the place of arbitration or general principles of law. 

Given the above, which is not an exhaustive list of concerns with the addition, it would be wise for the tribunal to err on the side of caution in the application of this new rule as swift and unconsidered action may lead to problems at the enforcement stage.

4. Production of Documents/Translations

Article 3.12(d) “Documents to be produced in response to a Request to Produce need not be translated.

Article 3.12(e) “Documents in a language other than the language of the arbitration that are submitted to the Arbitral Tribunal shall be accompanied by translations marked as such."

Articles 3.12(d) and (e) codify what many practitioners have probably regarded as standard practice, i.e., that documents produced in document production need not be translated into the language of the arbitration, whereas all documents submitted to the tribunal must be accompanied by translations and marked as such.

These clarifications are certainly welcome given the urge by some parties to shift the burden of translation to the other party during disclosure, and particularly, in the case of extensive and voluminous document requests (for example, in many large-scale construction disputes) where time and cost efficiencies are of particular concern. With this revision, the financial burden rests with the party who will seek to use the extensive and voluminous documentation that it has requested. 

Both the IBA Rules and the Commentary are silent, however, as to the practice of submitting only partial translations of the relevant parts of a document, indicating that this issue and similar issues relating to the timing of submissions and resolution of disputes on translations are to be addressed between the parties and if need be, by the tribunal, as is the case in practice today.  

5. Testimony of fact witnesses and experts

Article 4.6(b) “If Witness Statements are submitted, any Party may, within the time ordered by the Arbitral Tribunal, submit to the Arbitral Tribunal and to the other Parties revised or additional Witness Statements, including statements from persons not previously named as witnesses, so long as any such revisions or additions respond only to: (a) matters contained in another Party’s Witness Statements, Expert Reports or other submissions that have not been previously presented in the arbitration.; or (b) new factual developments that could not have been addressed in a previous Witness Statement.

Article 5.3(b) “If Expert Reports are submitted, any Party may, within the time ordered by the Arbitral Tribunal, submit to the Arbitral Tribunal and to the other Parties revised or additional Expert Reports, including reports or statements from persons not previously identified as Party-Appointed Experts, so long as any such revisions or additions respond only to: (a) matters contained in another Party’s Witness Statements, Expert Reports or other submissions that have not been previously presented in the arbitration.; or (b) new developments that could not have been addressed in a previous Expert Report."

Articles 4.6(b) (concerning fact witnesses) and 5.3 (b) (concerning experts) clarify that the limitation of Articles 4.6(a) and 5.3(a) which allow additional or revised statements/reports only to the extent they respond to matters newly raised in another party’s witness statement or expert report does not apply to new developments that the witness or expert could not have already addressed in a previous statement or report. The Commentary explains that "[c]onsiderations of efficiency and good faith weigh in favour of giving a party a single opportunity to present its arguments and allowing additional opportunities only when it was not possible to make those arguments at the time."^[13]

In the authors’ experience, this new provision incorporates previous practice of tribunals when confronted with such new factual developments.  This provision also recognizes that a certain amount of flexibility should be permitted when it comes to dealing with witnesses (both fact and expert). While the IBA Rules generally promote efficiency, importantly they also allow tribunals the necessary leeway to address each unique situation, which may or may not require the submission of a further statement.  Flexibility remains a key element to the overall success of international arbitration, and is more of an art than a science, something to be carefully considered when it comes to the selection of arbitrators.

6. Other changes

Aside from the major changes addressed above, other changes to the rules include:

• Article 3.5 – Document Production: In the document production phase, the ability for the requesting party of certain documents to have the opportunity to respond, with permission of the tribunal, to an objection by the opposing party.In practice, this means that the “Redfern” or “Stern” schedules will get an extra column or row for that purpose – all though as a matter of practice this is often the case in any event.
• Article 6.3 – Tribunal-Appointed Experts: the Article is updated to eliminate previous potentially confusing language that could be read to suggest that a tribunal-appointed expert would have power to resolve any disputes over information or access, including, for example claims that information was privileged, which would be inconsistent with the sentence within the same Article that provides for the tribunal to resolve such disputes.^[14]
• Article 8.5 – Witness Testimony: The express provision of the tribunal’s ability to afford a witness further direct testimony, even where the statement of that witness stands as his or her direct testimony.

7. Conclusion

While the new 2020 IBA Rules contain some welcome modernizing features that will certainly aid parties and tribunals in the effective management of evidence in arbitral proceedings, these developments are not groundbreaking and reflect common practice in any event.  The conclusion to be drawn seems to be that apart from the increasing use of electronic evidence and remote hearings, the past ten years have not been characterized by revolutionary developments with respect to hearing protocols and procedural rules.  Only time will tell what the next decade may bring in particular as regards new developments in the field of technology.  It does not seem completely far-fetched to wonder whether the 2030 IBA Rules will address the use of holograms in virtual hearings.

Although not imprinted in the Rules, but rather in the Commentary, some will see it as encouraging to see that environmental concerns were listed as a consideration for the insertion of Article 8.2. In this respect, a possible area for future development would be the strengthening of a framework (potentially an expansion of Article 2.2(f)) to dissuade the historic practice of paper filings (especially for legal and factual exhibits).^[15]

Another area for future development is greater clarification on the scope and threshold of Article 9.6 (formerly 9.5), the ability for the tribunal to draw adverse inferences. Unfortunately, both the Rules and Commentary remain a clear copy-paste from their earlier versions. Despite the repeat appearance of adverse inferences in practice, the updated Rules and Commentary provide no further guidance. This makes it harder for tribunals to draw a clear line between the often-confused issues of adverse inference and burden of proof. Similarly, an area for further clarification could focus on the issue of legal privilege, in particular with respect to document production and the situation where two (or more) different common law/civil law standards of legal privilege (or equivalent concept) may be applicable.