By Ingrid Burke, RAPSI
In an effort to bridge the gaps between current and preferred practices, a major survey released last week is pulling back the drapes on the emerging trends of international arbitration.
The survey, conducted by the Queen Mary, University of London’s School of International Arbitration, features analyses of seven key areas of international arbitration: the selection or arbitrators; the organization of arbitral proceedings; interim measures and court assistance; the production of documents; fact and expert witnesses; pleadings and hearings; and the arbitral award and overall costs.
The survey was conducted in two phases: first, quantitative and second, qualitative. During the first phase, 710 respondents completed a written survey. These respondents included private practitioners (54%), arbitrators (26%), as well as in-house counsel (10%) and a mix of other relevant professionals. During the second phase, 104 practitioners contextualized the questionnaire results by way of brief interviews.
Region-specific arbitration trends
While the survey noted region-specific trends when such proved particularly notable, regional results were not present throughout the course of the survey. To find out how the overall results might impact Russia’s place in the international arbitration community, RAPSI turned to David Goldberg, an international arbitration partner at White & Case, LLP who divides his time between the firm’s London and Moscow offices.
One key issue for Eastern Europe is that of its poor reputation for compliance with tribunal-ordered interim measures (39%). In comparison, North America and Western Europe reported the highest compliance rates, at around 68%. According to Goldberg, “This shows that there is less respect for the arbitral process in Eastern Europe and, as a result, a significantly higher percentage of parties from Eastern Europe (23%) seek enforcement of tribunal-ordered interim measures in a court, compared to only 3% in North America, 6% in Western Europe and 10% in Asia. This extra procedural step naturally adds additional costs to the proceedings.”
One key trend that emerged in several different areas of the survey was that of the differing practices of common-law and civil-law countries. David Goldberg explained to us, however, that in practice this poses few problems: “Divergences between common and civil lawyers - including those from Eastern Europe and Russia - generally don't cause too many problems as, in the absence of agreement between the parties, the tribunal determines which procedures will apply, after taking into account both sides’ positions. In the event that a party does not comply with the procedures, the other party may seek to enforce them in a court, or the tribunal may draw adverse inferences from the improper conduct and/or take that conduct into account when allocating costs.”
Selection of arbitrators
The vast majority of respondents voiced a preference for the right of each party to unilaterally select one co-arbitrator in three-member tribunals. Many respondents (54%) believed that the selection of either the chair of a three-member tribunal or that of a sole arbitrator should be made by agreement of the parties, although a substantial number (27%) prefer the selection of such by an arbitral institution or appointing authority.
Attitudes were somewhat favorable toward the appropriateness of parties conducting pre-appointment interviews with potential arbitrators in order to gauge a given candidate’s “availability, personality and knowledge or experience in the specific field relevant to the dispute.” 46% or respondents found such interviews appropriate in general, and 40% found them to be appropriate under certain circumstances.
The majority of respondents found it inappropriate during pre-appointment interviews to ask candidates about the following issues: his or her position on the legal questions relevant to the case (84%), whether he or she is a strict constructionist vs. someone that might be influenced by the equities of the case (64%), or about prior views he or she might have expressed (59%). On the other hand, questions about a candidate’s procedural preferences and background in a given legal field, as well as chair nomination issues, were generally considered appropriate. In fact 74% of respondents found it appropriate for appointing parties to discuss the appointment of a tribunal chair with chosen candidates.
Organization of arbitral proceedings
The International Bar Association’s (IBA) Rules on the Taking of Evidence in International Arbitration were considered useful by the overwhelming majority (85%) of respondents. 60% regularly use the rules, but they are only binding in 7% of cases, serving merely in an advisory capacity in the remaining 53% of cases. As procedural flexibility is seen as one of the key advantages of international arbitration (over, for example, litigation), most respondents preferred to adopt the IBA rules for reference, rather than in a binding capacity.
41% of respondents voiced a preference for selecting the procedural framework and timetable before the start of proceedings via an in-person hearing, and 33% preferred to do so via a telephone or video conference. Only 7% tended not to determine these factors prior to the start of arbitration.
Tribunal secretaries are used in only about 35% of cases, but of those they are used twice as frequently by civil lawyers (46%) than by common lawyers (24%). Those who utilize tribunal secretaries find that they increase efficiency throughout the course of proceedings. Those who refuse their services tend to believe that “all duties should rest with the tribunal members alone.”
The most popular means of expediting proceedings are: the prompt selection by the tribunal of issues to be determined during proceedings and the appointment of a sole arbitrator. The most divisive means are: the simultaneous, as opposed to sequential, exchange of substantive written submissions (37% for, 44% against), the imposition of short time limits for the exchange of such submissions (48% for, 42% against), and the imposition of page limits for the exchange of such submissions (31% for, 39% against).
Fast-track arbitrations as a means of ensuring expediency are rare. Only 6% of respondents had engaged in a significant number (six or more) fast-track arbitrations in the past five years, and 54% had not engaged in any during that time period. Those interviewed about their experience in the field generally found that fast-track arbitration was appropriate in simple cases, but inappropriate for more complex cases. In the latter, fast-track arbitration was generally found to “[jeopardize] the quality of the award.”
Interim measures and court assistance
Requests for interim measures to courts and arbitral tribunals were rare. 77% of respondents attested to having had experience with such claims to arbitral tribunals in less than a quarter of cases, and 89% had dealt with such claims to courts in less than a quarter of cases. Only 1% of respondents reported having experienced claims for interim relief to either courts or arbitral tribunals in 75-100% of cases.
Requests for document production are much more common among common lawyers than civil lawyers. The former reported having experienced document-production requests by one or more parties in 75-100% of cases over the past five years. Only 21% of the latter had dealt with such requests in 75-100% of cases, and 35% had dealt with them in a quarter or less of all cases.
In order to deal with this discrepancy, in light of the obvious fact that international arbitration requires lawyers from both traditions to work together, the majority (70%) of respondents believed that the IBA Rules should govern document production. The Rules stipulate for the production of documents that are “relevant to the case and material to its outcome.”
While only 3% of respondents favored a prohibition of all document production, 41% felt that the documents obtained through document production materially affected the outcome of less than a quarter of cases.
Fact and expert witnesses
In a slim majority (48%) of cases, fact witness evidence was offered by an exchange of written witness statements and direct examination at the hearing. In 39% of cases, witness evidence was offered by written statement with little to nothing in the way of direct examination.
Respondents were mixed on the question of whether written statements could effectively replace direct examination at hearings, with 59% viewing this as an adequate method and 34% disagreeing. A significant majority of respondents (63%) argued that attorneys should be charged with questioning witnesses, rather than the tribunal itself.
Cross-examination is an enormously favored practice, with 90% or respondents having urged the effectiveness of such for fact witnesses, and 86% doing so for expert witnesses.
Witness conferencing is a theoretically (but not so much practically) emerging trend wherein fact or expert witnesses from two or more parties are questioned together on a given issue by the tribunal or attorneys. In practice, very few (1-3%) respondents reported that they had experienced it in 75-100% of cases, but 62% believed that it should be done more frequently with expert witnesses.
Respondents were mixed on who should appoint an expert witness. 43% believed they should be chosen by the parties, 31% by the tribunal, and 28% thought neither option outshone the other.
In the vast majority of cases, expert witnesses had not been directed to confer in advance of a hearing, but 54% or respondents thought that this would be a useful practice.
Pleadings and hearings
In most (82%) cases, substantive written submissions were exchanged sequentially, rather than simultaneously. 79% of respondents found a sequential exchange ideal. 53% of such submissions were accompanied by exhibits, witness statements, and expert reports, and 59% of respondents preferred this method, as opposed to splitting up the various forms of submissions and delivering them at different times.
In most (63%) of cases, the following written submissions were exchanged: a statement of the case, the defense statement, a reply, and a rejoinder.
Respondents were fairly evenly split when asked whether substantive written submissions should be limited, with 45% responding favorably and 47% against such restrictions.
There was no clear answer on the preferences of respondents with regard to closing submissions. 28% favored post-hearing briefs, and 13% favored oral closing submissions. 24% preferred both, and 32% felt that this was really a case-specific question.
Arbitral award and costs
Asked about the appropriate time frame for the issuance of an award, most respondents believed the sooner, the better. The vast majority felt that sole arbitrators should be expected to render an award within three months, and 0% thought such could take 9-12 months. Most (41%) thought that three-member tribunals should be afforded three to six months, although a substantial number (37%) thought they too should be expected to reach a decision in less than three months.