Pieter spuijbroek witness evidence in international commercial arbitration by Pieter Spuijbroek

Witness Evidence in International Commercial Arbitration The use of written witness testimony in lieu of oral examination in international commercial arbitration

Pieter Spuijbroek 5870577 16 January 2013

Special thanks to: De Brauw Blackstone Westbroek for letting me use their law library and facilities night and day for the writing of this thesis to Nathan D. Oâ&#x20AC;&#x2122;Malley who has been kind enough to invite me to his Rotterdam office and let me read and take notes from his latest published work on the IBA Rules of Evidence when I could not g et my hands on any copy thereof and to Marc Spuijbroek for being the first reader and providing valuable feedback

Foreword and choice of subject In 2013 I participated in the Willem C. Vis International Commercial Arbitration Moot Court in Hong Kong and Vienna, a worldwide convention and competition based on a fictitious international arbitration to which the CISG and the UNCITRAL Rules apply. Each year a controversial issue is chosen by the editors of the competition to have the participants research, debate and take a stance on during the pleading sessions. Last yearâ&#x20AC;&#x2122;s issue focused on the valuation of witness evidence by an international arbitral tribunal. In particular, the question was posed what to do with the written testimony of a witness who is unable or unwilling to appear before the tribunal in order to be cross-examined by the tribunal and the opposing party. With regard to this issue, the IBA Rules on the Taking of Evidence in International Arbitration are highly relevant. According to these rules the written witness testimony of such a witness is inadmissible, unless there are extraordinary circumstances that would justify taking into account such evidence. Even then little or no value can be attached to the written statement. As I started researching the subject it struck me as odd that such a strict principle is applied. One of the main advantages of arbitration is that parties are allowed to select professional arbitrators with relevant knowledge and expertise to judge their case. Is it not more logical to have the tribunal freely decide on the value and admissibility of all evidence? This is what most arbitration rules provide for; the tribunal is free to decide on the admissibility, weight and relevance of all evidence presented to it. Then why would this be any different when it comes to written witness testimonies, at least in the IBA Rules? There still is no unanimity in the world of international arbitration with regard to this subject. Nevertheless, the IBA Rules are very frequently relied on in international arbitrations. I decided to research where the issue comes from: why does there seem to be a divide in attitude towards witness evidence? How do these different attitudes translate to international arbitration, where many different legal traditions meet in an â&#x20AC;&#x2DC;international arenaâ&#x20AC;&#x2122;? The main problem addressed in this thesis is why the view towards witness produced evidence is a controversial one, and why there seems to be ample support for the IBA Rules even though they seem to, at least for this issue, hold a controversial view with regard to witness evidence.

Index Foreword and choice of subject ............................................................................................. I Index ..................................................................................................................................... II Abbreviations ..................................................................................................................... IV Authorities ............................................................................................................................ V Introduction .......................................................................................................................... 1 1

Witness testimony in different legal traditions ............................................................. 2 1.1

Introduction ............................................................................................................ 2

1.2

Common Law ......................................................................................................... 2

1.2.1

Origin and main features ................................................................................. 2

1.2.2

Evidence .......................................................................................................... 3

1.3

Cross-examination: definition and scope ................................................................ 4

1.4

Civil Law ................................................................................................................ 5

1.4.1

Origin and main features ................................................................................. 5

1.4.2

Evidence .......................................................................................................... 6

1.5 2

Conclusion .............................................................................................................. 7

International arbitration ................................................................................................ 8 2.1

Introduction ............................................................................................................ 8

2.2

Characteristics of International Arbitration ............................................................ 8

2.2.1

Party autonomy ............................................................................................... 9

2.2.2

Confidentiality ............................................................................................... 10

2.2.3

Recognition of arbitral awards ...................................................................... 10

Witness evidence in arbitration ................................................................................... 12 3.1

National arbitration laws ...................................................................................... 12

3.1.1

Arbitration in the Netherlands ....................................................................... 13

3.1.2

Arbitration in England ................................................................................... 14

3.1.3

Arbitration in Sweden ................................................................................... 15

3.1.4

Arbitration in Germany ................................................................................. 15

3.1.5

Arbitration in China ...................................................................................... 16

3.2

International Arbitration Practice ......................................................................... 17

3.2.1

UNCITRAL ................................................................................................... 17

3.2.2

LCIA ............................................................................................................. 19

3.2.3

ICC and ICSID .............................................................................................. 20

3.3

The IBA Rules of Evidence .................................................................................. 20

3.4

Conclusion ............................................................................................................ 22

Written witness statements and cross-examination in international arbitration .......... 22 4.1

The use of written witness testimony in international commercial arbitration ..... 23

4.2

The right to cross-examination in international commercial arbitration ............... 23

4.2.1

Untruthful witness testimony: criminal prosecution, unenforceability or civil

liability? ...................................................................................................................... 24 4.2.2

Trusting witness testimony ............................................................................ 26

4.3

Written witness testimony in lieu of oral testimony ............................................. 28

4.4

Article 4.7 of the IBA Rules ................................................................................. 30

Conclusion .................................................................................................................. 33 5.1

Summary .............................................................................................................. 33

5.2

What to do with the IBA Rules? ........................................................................... 34

III

Abbreviations 3.

AAA

American Arbitration Association

AAE

Arbitration Act England (1996)

CCP

Code of Civil Procedure

CEAC

10.

Chinese European Arbitration Centre

11.

CEPANI

12.

Belgian Centre for Arbitration and Mediation

13.

IBA

14.

International Bar Association

15.

IBA Rules

16.

International Bar Association Rules on the Taking of Evidence in International Arbitration

17.

ICC

18.

International Court of Arbitration

19.

ICDR

20.

International Centre for Dispute Resolution

21.

ICSID

22.

International Centre for the Settlement of Investment Disputes

23.

LCIA

24.

London Court of International Arbitration

25.

SCC

26.

Stockholm Chamber of Commerce

27.

UNCITRAL

28.

United Nations Centre for International Trade Law

29.

UNCITRAL Model30. Law

UNCITRAL Model Law on International Commercial Arbitration

31.

UNCITRAL Rules32.

UNCITRAL Arbitration Rules as revised in 2010

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Engle, P. W. (2013, November 22). Controlling Business Risks With International Commercial Arbitration. Retrieved Januari 1, 2014, from kluwerarbitrationblog.com: http://kluwerarbitrationblog.com/blog/2013/11/22/controlling-business-risks-withinternational-commercial-arbitration-2/ Fadlallah, I. (2009 Volume 25 Issue 3). Arbitration Facing Conflicts of Culture. Arbitration International, 303-317. Federal rules of Evidence 2013. (2013). United States. Fisher, G., & Tversky, B. (1999). The Problem with Eyewitness Testimony. Stanford Journal of Legal Studies, 25-29. Fouchard, Gaillard, Goldman, & Savage. (1999). Fouchard Gaillard Goldman on International Commercial Arbitration. The Hague: Kluwer Law International. Furuta, Y. (2005). The IBA Rules of Evidence Five Years Later. Conference of the International Bar Association (pp. 1-11). Prague: International Bar Association. Geen meineed; belofte of eed niet op voorgeschreven wijze afgelegd, LJN: BP3839 (Hoge Raad April 19, 2011). Geisinger, E., & Ducret, P. (2013). International Arbitration in Switzerland: A Handbook for Practitioners. Kluwer Law International. Generica Limited v. Pharmaceutical Basics, Inc., 96-4004 (United States Court of Appeals, Seventh Circuit 9 29, 1997). Greenberg, S., & Lautenschlager, F. (2011). International Arbitration and International Commercial Law: Synergy, Convergence and Evolution. Kluwer Law International. Grierson, J., & van Hooft, A. (Alphen aan den Rijn). Arbitrating under the 2012 ICC Rules. Deventer: Kluwer Law International. Hanotiau, B. (2003). Misdeeds, Wrongful conduct and Illegality in Arbitral Proceedings. ICCA Congress Series, 2002 volume 11, 261-287. Hinchey, J., & Baer, E. (2001). Exchanges of Documents and Depositions in International Arbitration. In C. f. Studies, The Arbitration Process (pp. 207-229). The Hague: Kluwer Law International. Horn, N., & Krรถll, S. (2004). Arbitrating Foreign Investment Disputes. Deventer: Kluwer. Hunter, J. (1997 Volume 13 Issue 3). The Procedural Powers of Arbitrators Under the English 1996 Act. Arbitration International, 345-360.

VII

Iannuzzi, J. (2011). Handbook of Cross Examination: The Mosaic Art. United States: Xlibris. International Council for Commercial Arbitration. (2011). ICCA's Guide to the Interpretation of the 1958 New York Convention: A Handbook for Judges. The Hague: Freely available for downloading at www.arbitration-icca.org/media. Kehoe, E. (2010). Cross-examination and Re-cross in international arbitration. In D. Bishop, & E. Kehoe, The Art of Advocacy in International Arbitration (pp. 405430). New York: JurisNet. Kirby, J. (2011 Volume 28 Issue 4). Witness Preparation: Memory and Storytelling. Journal of International Arbitration, 401-406. Kühner, D. (2010). The Revised IBA Rules on the Taking of Evidence in International Arbitration. Journal of International Arbitration, 667-677. Kurkela, M. S. (2010). Due Process in International Commercial Arbitration. New York: Oxford University Press. Law, U. N. (2012). UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration. United Nations, Commission on International Trade. Vienna: United Nations. Lévy, L. (2005). Testimonies in the Contemporary Practice: Witness Statements and Cross Examination. In S. Bond, Arbitral Procedure at the Dawn of the New Millenium: Reports of the International Colloquium of CEPANI. Brussels: Bruylant. Lew, J. D., Mistelis, L. A., & Kröll, S. M. (2003). Comparative International Arbitration. The Hague: Kluwer Law International. Lew, J., Mistelis, L., & Kröll, S. (2003). Comparative International Commercial Arbitration. Deventer: Kluwer Law International. Maurer, A. (2012). The Public Policy Exception unter the New York Convention. Huntington: Juris. Mcilwrath, M., & Savage, J. (2010). International Arbitration and Mediation: A Practical Guide. Deventer: Kluwer. Mehren von, G. M., & Salomon, C. (2003, Volume 20 Issue 3). Submitting Evidence in an International Arbitration: The Common Lawyer's Guide. Journal of International Arbitration, 285-294. Nilsson, B., & Andersson, B. (2013). International Arbitration in Sweden: A Practitioner's Guide. Kluwer Law International.

VIII

Nispen, v. (2012). De wijze van verhoor bij: Wetboek van Burgerlijke Rechtsvordering, Artikel 179. In Tekst en Commentaar Burgerlijke Rechtsvordering. Oblin, K. (2009). Austrian Arbitration Yearbook. C.H. Beck, StĂ¤mpfli & Manz. O'Connor, V. (2012). Common Law and Civil Law Traditions. Freely accessible via inprol.org: INPROL (International Network to Promote the Rule of Law). Oetiker, C. (2007 Volume 25 Issue 2). Witnesses before the International Arbitral Tribunal. ASA Bulletin, 253-278. O'Malley, N. D. (2012). Rules of Evidence in International Arbitration. London: Informa. Otto, D., & Elwan, O. (2010). Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary on the New York Convention. Kluwer Law International. Paklito Investments Ltd. v. Klockner East Asia Ltd. (High Court of Hong Kong 1 15, 1993). Pejovic, C. (2001). Civil Law and Common Law: Two Different Paths Leading to the Same Goal. Victoria University Wellington Law Review, 817-841. Petrochilos, G. (2004). Procedural Law in International Arbitration. New York: Oxford University Press. Phipson, S., & Howard, M. (2000). Phipson on Evidence. London: Sweet & Maxwell. Queen Mary University of London; School of International Arbitration. (2012). 2012 International Arbitration Survey. London: White & Case. Rawding, N., Fullelove, G., & Martin, P. (2013). International Arbitration in England: A Procedural Overview. In J. Lew, Bor, & H, Arbitration in England with chapters on Scotland and Ireland (pp. 361-398). Kluwer Law International. Redfern, A., Hunter, M., Blackaby, N., & Partasides, C. (2009). Redfern and Hunter on International Arbitration. New York: Oxford University Press. Reed, L., Paulsson, J., & Blackaby, N. (2011). Guide to ICSID Arbitration. Alphen aan den Rijn: Kluwer Law International. Rubino-Sammartano, M. (2001). International Arbitration Law and Practice. Dordrecht: Kluwer. Rubinstein, J. (2004). International Commercial Arbitration: Reflections at the Crossroads of the Common Law and Civil Law Traditions. Chicago Journal of International Law, 303-308. S.D. Myers, Inc. v. Canada, NAFTA, Partial Award (11 13, 2000). Sachs, K., & LĂśrcher, T. (2007). Arbitration in Germany: The Model Law in Practice. Kluwer Law International.

Saleh, S. A. (1999 Volume 15 Issue 2). Reflections on Admissibility of evidence: Interrelation Between Domestic Law and International Arbitration. Arbitration International, 141-160. Sanders, P. (1999). Quo Vadis Arbitration? Sixty Years of Arbitration Practive, A Comparative Study. Deventer: Kluwer. Schwarz, F., & Konrad, C. (2009). The Vienna Rules: A Commentary on International Arbitration in Austria. Alphen aan den Rijn: Kluwer Law International. Segesser, G. v. (2010). The IBA Rules on the Taking of Evidence in International Arbitration: Revised version, adopted by the International Bar Association on 29 May 2010. ASA Bulletin Volume 28 Issue 4, 735-752. Shenton, D. (1985 Volume 1 Issue 2). An introduction to the IBA Rules of Evidence. In S. D, Arbitration International (pp. 118-123). Kluwer Law International. Sime, S., Rench, D., & Kay, M. (2013). Blackstone's Civil Practice 2013. Croydon: Oxford. Simpson Thatcher & Bartlett LLP. (2008). Comparison of International Arbitration Rules. Huntington: Juris. Sinclair, A. (2010). Differences in the Approach to Witness Evidence between the Civil Law and Common Law Traditions. In D. Bishop, & E. Kehoe, The Art of Advocacy in International Arbitration (pp. 23-49). New York: JurisNet. Strikwerda, L. (2008). Inleiding tot het Nederlands Internationaal Privaatrecht. Deventer: Kluwer. Subcomittee, 1. I. (2010). Commentary on the Revised text of the 2010 IBA Rules on the Taking of Evidence in International Arbitration. International Bar Association. Tao, J. (2012). Arbitration Law and Practice in China. Kluwer Law International. Tidwell, G. L. (1983). The Effects of Perjury Committed at an Arbitration Hearing. Arbitration Journal, 44. Turner, P., & Mohtashami, R. (2009). A Guide to the LCIA Arbitration Rules. New York: Oxford. Ulmer, C. (2011 Volume 28 Issue 4). Language, Truth and Arbitral Accuracy. Journal of International Arbitration, 295-311. UNCITRAL. (2012). UNCITRAL Notes on Organizing Arbitral Proceedings. New York: UNCITRAL. United Nations. (2013). A Guide to UNCITRAL, Basic facts about the United Nations Commission on International Trade Law. Vienna: United Nations.

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Introduction 1.

This thesis explores the issue of witness testimony in international commercial arbitration. The main questions it seeks to answer is: how does contemporary international commercial arbitration practice treat written witness testimony, unsupported by oral examination? This question generates the following sub questions: why is the valuation of witness produced evidence a controversial issue in international arbitration? How is the issue dealt with in national courts and national arbitrations? How do most commonly used (in both common and civil law countries) international arbitration rules, deal with this issue? Are there clear international practices regarding the right to cross-examination and the use of written testimony? What is to be done with a written witness statement if no oral examination is possible?

To answer these questions, first the different approaches to witness evidence will be explained against the backgrounds of both civil law and common law traditions in chapter 1, where also the definition and main characteristics of cross-examination are discussed. After that, a short introduction to international arbitration will be given in chapter 2, focusing on the aspects of arbitration that are most relevant to the main theme of this thesis. In chapter 3 the use of witness evidence in arbitration is discussed. To this extent, some national arbitration laws are discussed first, to illustrate the effect the different approaches to witness testimony taken by civil law and common law traditions have on the conduct of national arbitration.

Chapter 4 discusses how these different approaches converge in the ‘arena’ of international arbitration, where parties and legal counsel from different legal traditions meet. The right to cross-examination is discussed and the use of written witness testimony evaluated. The conclusion (chapter 5) summarizes the thesis and attempts to answer the problem. A somewhat critical view of article 4(7) IBA Rules on the Taking of Evidence is expressed. “The divergence of local practices regarding the treatment of witness evidence, the influence of such practices in international commercial arbitration, and parties’ perceived need to rely upon witness testimony to support their respective cases make this an important topic for all arbitration practitioners”.1

(Bühler & Dorgan, 2000), p.4.

Witness testimony in different legal traditions

1.1

Introduction

Various legal systems have a different view towards witness produced evidence. Most prominently visible is the difference between witness testimony in common law systems on the one hand, and civil law systems on the other hand.2 Where in common law procedures there is commonly a large emphasis on oral testimony of witnesses, in civil-law procedures documentary evidence is usually valued more highly than witness testimony.3 This view towards evidence is translated in the way court proceedings are administered. 4 Where common law court proceedings typically include oral witness testimony with direct- and cross-examination (often in intense/aggressive manner) the civil law procedure is usually a document oriented one where, if witness testimony is used at all, there is usually no cross examination of witnesses. 5 This chapter gives a brief introduction to both legal traditions, and to the way they differ when it comes to valuing witness produced evidence. 1.2

Common Law

1.2.1 Origin and main features 5.

The common law tradition is the legal tradition which arose in England after it was conquered by the Normans in 1066 A.D. 6 It is found primarily in England, North America and Oceania. 7 Traditionally common law judges create law by ruling on a case-by-case basis and then apply the created rules to future similar cases. 8 Although traditionally there are few binding codes, statutes or law books in the common law tradition, the desire to use

(Mehren von & Salomon, 2003, Volume 20 Issue 3), p.288-289; (Lew, Mistelis, & Krรถll, 2003), p.556; (Fouchard, Gaillard, Goldman, & Savage, 1999), p.702.

(Rubino-Sammartano, 2001), p.679.

(Sinclair, 2010), p.23-49.

This is not to say that cross-examination is never allowed in civil-law systems. It is however much less common than it is in common law, (Elsing & Townsend, 2002 Volume 12 Issue 1) p.61-62.

(O'Connor, 2012), p.11; (Pejovic, 2001), p.818-819; on the history of the common law legal family see also (Zweigert & Kรถtz, 1998) p.218-238.

http://www.juriglobe.ca/eng/index.php

(O'Connor, 2012), p.14.

law as a way to bring about swift changes in common law countries has caused the importance of laws and statutes to increase rapidly over the last few decades.9 6.

The common law judicial process is an adversarial one, meaning that the judge acts as an impartial referee ‘sitting on the side-line’ guarding the (due process) corners of the procedure rather than actively engaging in the process of discovering the truth.10 Parties and their counsel are responsible for bringing to the judge or jury's attention those facts and circumstances they deem crucial for their case: “the burden of preparing and presenting evidence lies entirely with the parties”. 11 The common law judicial process has always been mostly an oral process where "motions and objections are often made orally by counsel, and the judge rules orally on them", which has to do with the fact that laymen sitting on juries were often illiterate people. 12 In common law jurisdictions juries were often responsible for the process of discovering the truth, not actively but by deciding on the value of the evidence presented by the parties. 13 However, over the last few decades the use of juries has significantly lessened, especially in civil cases. 14 1.2.2 Evidence

The mainly oral nature of common law court proceedings is visible in the way evidence is presented and valued. Oral evidence by witnesses is a prominent form of evidence in common law and "is given considerable weight and will usually prevail over written evidence".15 Witness testimony given by a witness during oral examination is an important source of evidence in common law; 16 some even go so far as to state that "the common law

(Warren, 2006), p.57.

(Lew, Mistelis, & Kröll, 2003), p.554-555.

(Shenton, 1985 Volume 1 Issue 2), p.120.

“Because the jury was comprised of mostly illiterate people, the proceedings were oral, the implications of which can still be seen today in the modern common law system” (O'Connor, 2012), p.11; see also: (Pejovic, 2001), p.833.

“Litigation in the common law countries is traditionally adversarial: the principle is that the parties arrive at the truth bye ach leading evidence and each then testing the evidence led by the other through cross examination of the relevant witnesses”, (Lew, Mistelis, & Kröll, 2003), p.555.

(Andrews, 2003), p.470.

(Pejovic, 2001), p.833. This reliance on oral testimony is “kept in check by the opposing counsel’s right to cross-examination”, (Fisher & Tversky, 1999), p.29.

(Pejovic, 2001), p.833; see also (O'Connor, 2012), p.26-27 and (Fadlallah, 2009 Volume 25 Issue 3), p.314.

tends to be sceptical that the sun has risen unless a witness can be found to testify under oath that he saw it do so".17 1.3 8.

Cross-examination: definition and scope

Cross-examination is the "questioning of a witness or party during a trial, hearing, or deposition by the party opposing the one who asked the person to testify in order to evaluate the truth of that person's testimony, to develop the testimony further, or to accomplish any other objective".18 The primary way to challenge a witness' credibility is through the process of cross-examination, which is a characteristic feature of common law.19 Cross-examination is the examination of the witness or party by the other party than the one presenting the evidence. 20 An important difference between common law crossexamination and the possibility for parties to ask questions of the other parties’ witness in a civil law style, is that in cross-examination the use of leading questions is allowed. 21

The U.S. Supreme Court once quoted an American legal scholar calling cross-examination the "greatest legal engine ever invented for the discovery of truth", at the same time explaining that one of the purposes of cross-examination in court is to give the jury the opportunity to assess the witness' credibility. 22 For this reason, witness testimony is principally valued more if the witness gives oral evidence during a hearing while the parties to the dispute are present, giving those involved an opportunity to assess the veracity of the witness' testimony. 23 In relation to evidence checked by cross-examination, witness evidence in writing which is not presented by a witness giving oral testimony in 17

(Elsing & Townsend, 2002 Volume 12 Issue 1), p.62; see also (Shenton, 1985 Volume 1 Issue 2), p.120-121.: “It is a cornerstone of the system that the basic evidence is called in the form of verbal testimony of witnesses, including the testimony of the parties to the dispute. It is equally fundamental that such evidence be tested by cross-examination.”

(West, 1997).

(Born G. , International Commercial Arbitration, 2009) p.1786; (Lew, Mistelis, & Kröll, 2003) p.555; (Elsing & Townsend, 2002 Volume 12 Issue 1) p.62, “cross-examination is a core part of the common-law tradition”, (Rawding, Fullelove, & Martin, 2013), p.389.

“Cross-examination is intended to whittle down your trial Adversary’s direct evidence, to hone down the case against your client, and to take testimony and exhibits intended by your Adversary to damage your client and deftly neutralize or dilute them substantially”, (Iannuzzi, 2011), p.1; The judge asking questions of the witness is part of the direct examination, this does not fall within the definition of cross -examination.

“but importantly, the attorney may ask leading questions, in which he/she is allowed to suggest answers or put words in the witness' mouth”, Hill legal dictionary, 2005.

(California v. Greene, 1970).

(Rubinstein, 2004), p.4; (Lew, Mistelis, & Kröll, 2003), p.562; (Saleh, 1999 Volume 15 Issue 2), p.141-142.

the proceedings is usually considered less credible and thus less valuable. 24 As will be further discussed in chapter 4.2, the process of cross-examination is often regarded as necessary when the witness’ testimony is used to establish important facts of the case at hand. 10.

Written evidence not confirmed while testifying at the trial or hearing concerned is under several common-law systems deemed hearsay unless the declarant is subject to crossexamination, because it is a declaration of what another person has stated, put on paper but not experienced by the person submitting it as evidence. 25 The ‘hearsay rule’ 26 and the general rule of admissibility of evidence in common law are instruments historically used to protect the lay members of the jury from being misled. 27 Even though the use of juries is far less common in present day proceedings, the rules of admissibility still apply. 28 The English Court of Appeal ruled in a 1986 case that denying cross-examination wholly would be a denial of natural justice. 29Although the written evidence of a witness unavailable for examination is now more frequently admitted, it is valued less than oral testimony of a witness who is available for cross-examination. 30 Direct- and cross-examination remain an important part of the fact finding process in common law court cases. 1.4

Civil Law

1.4.1 Origin and main features 11.

The civil law tradition finds its roots in ancient Roman law. 31 Most European, South- and Central American and Asian countries are civil law countries. The civil law characteristically relies on codes and statutes as its main source of law, although legal 24

(Phipson & Howard, 2000), p.630-631; see also the ‘ten commandments of cross-examination’, (Bishop & Kehoe, 2010), p.556-557; (California v. Greene, 1970), §2-4.

See for a United States example (Federal rules of Evidence 2013, 2013) Rule 801.

“The hearsay rule prohibits admission of certain statements made by a declarant other than while testifying at trial”, (United States v. Salerno, 1992), p.320-321.

“The historic origin of the rule of admissibility is clear […] justified for the protection of the lay members of the jury, when faced with potentially unreliable evidence […] Despite the fact that this justification is now redundant […] the rules of admissibility still remain.”, (Saleh, 1999 Volume 15 Issue 2), p.142.

“[N]early all English civil trials are heard by a professional judge, who can be expected to apply educated good sense when assessing evidence.”, (Andrews, 2003), p.725.

(Sime, Rench, & Kay, 2013), p.696; (Andrews, 2003), p.780.

(Andrews, 2003), p.725; see also (Ventouris v. Mountain, 1991); (Rubinstein, 2004) p.4; (Pejovic, 2001), p.833; (Fisher & Tversky, 1999), p.25, 29; see also: paragraph 4.3.

(O'Connor, 2012), p.11; (Pejovic, 2001), p.818-819; see also (Zweigert & Kötz, 1998), p.74-131.

precedent is also an important source of law. 32 The civil law procedure is mainly document oriented. 33 Where in common law the parties are responsible for bringing as much information, documents and witnesses to the judge for it to be able to assess the truth, in civil law proceedings the judge has a more active task in the discovery of the truth than does the jury or judge in common law.34 This active attitude towards finding the truth is also reflected by the manner of summoning and investigating witnesses. The court summons the witnesses and the judges question them. 35 In civil law, asking leading questions is usually not allowed. For instance in Dutch law, even though parties’ witnesse s may be questioned by the opposing parties, this is done under supervision of the court. 36 This supervision means that “suggestive questions are not to be feared, for the judge can prevent them from being answered”. 37 This is thus an essentially different type of questioning than is done in the common law style of cross-examination. 38 1.4.2 Evidence 12.

Oral witness testimony is not as commonly used in civil law as it is in common law and if it is used it is usually not granted as much weight as documentary evidence. 39 Documentary evidence is the main evidence in civil law proceedings: “[t]he civil law countries give priority, in legal proceedings, to written evidence. A mistrust of witness testimony has limited its admissibility; in commercial matters, modes of evidence are in principle unrestricted, but only very rarely in the courts is evidence based on witness testimony. ”40 Another important reason for the limited use of oral witness testimony, aside from issues of

(O'Connor, 2012), p.10-11.

(Born G. , International Commercial Arbitration, 2009), p.1787; (Saleh, 1999 Volume 15 Issue 2), p.142.

(Lew, Mistelis, & Kröll, 2003), p.554-555.

“In civil law systems, as is generally known, the examination of the witness is conducted by the judge ” (Rubino-Sammartano, 2001), p.679; see also (Lew, Mistelis, & Kröll, 2003), p.554-556.

According to (Vlas & Tjong Tjin Tjau, 2014), this wasn’t allowed under the old article 109(2) CCP, but has been added to adapt to contemporary practice in article 166 Dutch Code of Civil Procedure.

(Nispen, 2012) in Tekst en Commentaar Burgerlijke Rechtsvordering, translated from Dutch.

Where in this thesis a reference is made to cross-examination, explicitly the (somewhat aggressive) common law style of questioning is meant, whereby leading questions are allowed and the questioning is done by the opposing counsel directly, rather than through the judge.

(Fadlallah, 2009 Volume 25 Issue 3), p.314-315; (Bishop, Crawford, & Reisman, 2005), p.1463; (Rubinstein, 2004), p.388-309; (Pejovic, 2001), p.833; (Saleh, 1999 Volume 15 Issue 2), p.141.

(Fadlallah, 2009 Volume 25 Issue 3), p.314-315; see also: (Saleh, 1999 Volume 15 Issue 2), p.143.

credibility, is the fact that the holding of witness hearings is often burdensome and can limit the speed and flexibility of court proceedings. 41 13.

Furthermore, 'cross-examination' in the way it is used in common law proceedings is virtually unknown to civil law courts: "The idea of a witness being presented by the lawyer for a party in the question-and-answer format of common law direct examination is vaguely distasteful to civil lawyers. And the idea of a witness being required to agree or disagree with statements by a lawyer in the format the common law calls crossexamination is positively repugnant to them". 42 Instead, in most civil law countries, if witnesses are used their statements are usually presented in writing. If oral examination takes place it is mostly the judge who asks questions. 43 Although sometimes parties can request the judge to ask certain questions for them, or can ask questions themselves, this is always done under strict supervision of the court, and leading or suggestive questions are not allowed. 1.5

14.

Conclusion

Naturally, the differences between common law and civil law traditions are not always as clear and distinct between each country with a civil law tradition and each country with a common law tradition. There are many differences and similarities between different legal systems that cannot altogether be summarized as a common law versus civil law distinction. Nevertheless, the principles and main characteristics of both traditions and the key differences between common law and civil law in general when it comes to witness produced evidence, are necessary background information for understanding the main dispute discussed in this thesis. In general it can be said that common law procedure is focused on witness evidence whereas civil law is much more document oriented. Furthermore, in civil law there is usually no cross-examination whereas in common law cross-examination of witnesses is common practice.

For instance in Dutch law there is a tendency to avoid oral witness testimony altogether, and the hearing of witnesses is â&#x20AC;&#x153;becoming a rare phenomenonâ&#x20AC;?, translated from Dutch, (Asser, 2013), Â§216.

(Elsing & Townsend, 2002 Volume 12 Issue 1), p.62.

(Pejovic, 2001), p.834, See for example article 179 paragraph 2 and 3 of the Dutch Code of Civil Procedure (Wetboek van Burgerlijke Rechtsvordering), which holds that parties can ask questions of the witness but the judge may at any time decide that a question need not be answered by the witness, also the parties can ask the judge to pose certain questions to the witness, for another example article 202 of the Code of Civil Procedure and article 114 of the Rules of Civil Procedure of Japan; (Furuta, 2005), p.7.

15.

International arbitration

2.1

Introduction

A brief outline of the nature of common law and civil law traditions has been given and the general differences regarding witness evidence between the two traditions have been discussed. In this chapter, arbitration will be turned to. The main characteristics of international arbitration will be introduced in order to be able to refer to those characteristics later on in relation to cross-examination of witnesses.44 2.2

16.

Characteristics of International Arbitration

Arbitration is a time-tested, ever more popular mode of dispute resolution. 45 Despite the complexity of the issues sometimes dealt with in international arbitration, the principle of arbitration remains a simple one: parties to a dispute decide to appoint arbitrators they trust, to deliver a decision on a dispute which is keeping them divided. 46 There are many reasons to opt for arbitration rather than state-court litigation. For example the flexibility of the proceedings, the (technical, commercial or diplomatic) expertise of the arbitrators 47, time management 48, confidentiality49, neutrality, finality50 and the world-wide recognition

Wherever the term ‘commercial’ in ‘commercial arbitration’ is used in this thesis it should be read to have the meaning given to it by the UN Committee on International Trade Law in the footnote to article 1 of the UNCITRAL Model Law. This means that the word ‘commercial’ has a very broad application, dealing on all issues regarding trade, services and goods. Investment arbitration is only discussed in passing, for more information on this subject see: (Bishop, Crawford, & Reisman, 2005); (Wolfgang, 1995); (Horn & Kröll, 2004) and (Reed, Paulsson, & Blackaby, 2011), p.123-157.

(Redfern, Hunter, Blackaby, & Partasides, 2009), p.1; (Born G. , International Commercial Arbitration, 2009), p.5, for a comprehensive history of international arbitration see: (Born G. , International Commercial Arbitration, 2009), p.1-63; (Redfern, Hunter, Blackaby, & Partasides, 2009), p.3-10; (Fouchard, Gaillard, Goldman, & Savage, 1999) section II, p.13-44.

(Redfern, Hunter, Blackaby, & Partasides, 2009), p.1.

(Born G. , International Commercial Arbitration, 2009), p.63.

Although arbitral proceedings sometimes take years, parties to an arbitration are free to decide on their own time-schedule rather than being bound by the rigid time-schedule of (national) procedural laws.

Of both the (existence of) arbitral proceedings and the arbitral award, see for example Article 34 (5) UNCITRAL Rules; Rule 17 ICSID Rules; Article 30 LCIA Rules or Article 36 CIETAC Rules.

Commonly arbitration is a ‘one-stop-shop’, meaning that in principle there is no right to appeal, unless parties have specifically agreed thereto, see for a Dutch example article 1046(6) of the Dutch Code of Civil Procedure.

of arbitral awards 51 . The characteristic features of arbitration relevant to the issue of witness testimony will now be discussed in short. 2.2.1 Party autonomy 17.

Party autonomy is one of the leading principles of arbitration.52 Parties to an arbitration are free to decide on almost every aspect of the proceedings; they have agreed in advance that they forfeit (under certain circumstances) 53 the right to bring their case to a national court and have agreed to submit any or all disputes to arbitration instead. They are hence free to decide who the arbitrators will be 54, which law is applicable55, how the procedure is to be structured and within what time-limit an award is to be rendered. All of this, of course, within the basic requirements of due process. 56 This means inter alia that parties to an arbitral procedure are free to decide on the use of witness testimony. They can decide to limit witness testimony to written testimony, or that direct and cross-examination will be conducted. In most cases however, parties will not decide upon such specific issues at the time of drafting the arbitration agreement. Rather, they might use their party autonomy to decide on a specific set of rules. For instance evidential rules, such as the IBA Rules on the Taking of Evidence, or other procedural rules, such as the UNCITRAL arbitration rules, or a combination of the two.

Under the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which has been ratified by practically all trading nations, foreign arbitral awards are enforceable almost worldwide, see also: www.newyorkconvention.org.

(Redfern, Hunter, Blackaby, & Partasides, 2009), p.19, p.195-197; (Born G. , International Commercial Arbitration, 2009), p.59 and (Bühler & Dorgan, 2000), p.4.

It is possible to have a so called ‘tiered dispute resolution clause’ whereby for instance first mediation is required, and if mediation fails the dispute becomes subject to arbitration. Characteristic to arbitration agreements however, is that under certain circumstances the dispute will become subject to arbitration, upon the occurrence of which subjection national courts are no longer competent to decide the issue. See also on this subject: (Born G. , International Arbitration and Forum Selection Agreements: Drafting and Enforcing, 2013), p.159-170; (Redfern, Hunter, Blackaby, & Partasides, 2009), p.110; ASA Bulletin 1/2008, 87– 102 on (X v. Y, 2007) (in French), as discussed in (Boog, 2008 Volume 26 Issue 1) 103–112.

To this extent, arbitration institutes often maintain lists of arbitrators suitable to serve as presiding arbitrator should the parties be unable to agree on one, (Born G. , International Commercial Arbitration, 2009), p.1454.

Both procedural and material law can be chosen, contrary to national court proceedings where parties are commonly bound to accept the procedural law of the forum.

Article III in conjunction with Article V New York Convention 1958. See also: (International Council for Commercial Arbitration, 2011); (Maurer, 2012); (Otto & Elwan, 2010), (Kurkela, 2010) and chapter 4.

2.2.2 Confidentiality 18.

One of the big advantages of settling conflicts via international arbitration rather than by means of national court litigation is the confidentiality of the proceedings, which can be of the utmost importance for commercial parties as “there may be trade secrets or competitive practices to protect”.

Not only the outcome of the procedure (award) can be kept

completely confidential, but the contents of the proceedings as well. Thus parties are able to effectively protect their business or trade secrets as well as their brand name. 58 Commonly parties will agree upon such confidentiality in advance of the procedure, for instance while drafting the arbitration clause of the contract, and the confidentiality is upheld by the tribunal and by the parties. 59 2.2.3 Recognition of arbitral awards 19.

Another main advantage of arbitration, especially in an international setting, is the fact that arbitral awards are enforceable almost anywhere in the world. When dealing with parties from different countries in national courts, a judgment rendered by a court in one country may lack recognition in another country. This has a number of important consequences.60 For instance, it may mean that a dispute already settled in one country can be brought before another court as if it had not been adjudicated yet, simply because the latter court fails to recognize the binding power of the first court’s decision. Furthermore, there may be (and often is) an issue with the enforceability of foreign judgments, where a party who has obtained a court decision in one country wishes to enforce it in another country. 61 Whereas there are bilateral and multilateral treaties 62 on the recognition of foreign judgments between certain countries, and some countries may decide to recognize a foreign judgment unilaterally, this system does not have the advantages of the world-wide recognition of 57

(Born G. , International Commercial Arbitration, 2009), p.33.

“A well-crafted confidentiality provision within the arbitration clause will help address brand dilution or loss of reputation risks” (Engle, 2013).

(Fouchard, Gaillard, Goldman, & Savage, 1999), p.201.

Regarding the Dutch recognition of foreign judgments, see: (Strikwerda, 2008), p.267-286.

As recognized early in the 20 century, see the Geneva Protocol of 1923, as summarized in (Born G. ,

International Commercial Arbitration, 2009), p.59-61. 62

See for example: European Commission Regulation No 566/2013 of June 2013 regarding jurisdiction and the recognition and enforcement of judgment in civil and commercial matters; Uniform Enforcement of Foreign Judgments Act, 13 U.L.A. 216 of 1986, deciding that 47 states of the USA and certain island states shall recognize the validity of foreign judgments originating from each state. See also: <http://conflictoflaws.uslegal.com/enforcement-of-foreign-judgments/>.

foreign arbitral awards.

This makes arbitration especially suitable for international

disputes.

Status of the New York Convention 64 20.

There are some requirements for an award to be enforceable under the New York Contention. Parties must have had a fair trial, and arbitration has to be agreed to. Fairness of the proceedings means that certain basic elements of due process must have been met. For instance, the tribunal must be impartial and the parties must have had a reasonable opportunity to be heard and to present their case.65 If these minimum requirements have been met, and the dispute brought before the arbitral tribunal is in fact arbitrable 66, the award will in principle be enforceable in all countries party to the 1958 New York 63

(Born G. , International Commercial Arbitration, 2009), p.2701-2708.

<http://www.newyorkconvention.org/contracting-states/status-map>.

This is recognized in most arbitration rules, see for example article R-30 AAA; 33(1)(a) AAE; 20 FCC; 14(i) LCIA; 15 SWISS Rules and 38(b) WIPO. Furthermore the right to be heard as a due process right is recognised in major fundamental rights conventions such as in article 6(3) EHRC and articl e 10 UDHR.

‘Arbitrability’ means suitable to be settled by arbitration, which for instance in most states excludes cases regarding marital status, insolvency, natural resources or fraud or any other kind of criminal trial, (Redfern, Hunter, Blackaby, & Partasides, 2009), p.23 and p.123-135; Article II New York Convention (which uses the phrase “a dispute capable of settlement by arbitration”).

Convention on the Recognition and Enforcement of International Arbitral Awards. 67 The issue of due process in relation to witness testimony and enforceability of arbitral awards will be discussed in chapter 4.

3 21.

Witness evidence in arbitration

Witnesses in international arbitration usually provide written testimony and are subsequently examined by the parties. Despite the different approaches to witness testimony discussed in chapter 1, in arbitration the use of witness testimony is very common.68 Even in national arbitration laws of civil law countries, there is more emphasis on witness testimony in arbitration cases than there is in national court cases.69 In order to establish international practice with regard to witness testimony, the arbitration practice of some popular locations for international arbitrations will first be discussed and compared to their national court equivalent in 3.1. Even though “there exists no such thing as a civil law or Continental arbitration proceeding”70, distinctive features of national civil law and common law proceedings can be seen in the arbitration laws and practices of respectively civil law and common law countries. 71 After discussing these arbitration laws, in paragraph 3.2 more general international arbitration laws and practices will be turned to, in order to find out if there is in fact an international practice with regard to witness testimony. 3.1

22.

National arbitration laws

To illustrate the different approaches to witness evidence in common law and civil law arbitration procedures (as opposed to the national court proceedings as discussed in chapter 1), the arbitration practice of the Netherlands, England (as an example of a typical common law approach), Germany (as an example of a typical civil law approach) 72 , 67

Article III in conjunction with Article V New York Convention 1958. In 2013, 149 countries were party to the New York Convention, <http://www.newyorkconvention.org/contracting-states>.

(Shenton, 1985 Volume 1 Issue 2), p.120; (Bühler & Dorgan, 2000), p.4-5.

(Oetiker, 2007 Volume 25 Issue 2), p.253; even though “documentary evidence is undoubtedly the most important type of evidence. […] Documents outweigh testimony ”, (Bishop & Kehoe, 2010), p.594; see also: (Bishop, Crawford, & Reisman, 2005), p.1464 on the use of witness testimony in the Iran-US Claims Tribunal.

(Briner, 1997 Volume 13 Issue 2), p.159-160.

“Many civil systems will not give weight to witness’ oral evidence that courts and arbitral tribunals readily hear”, (Mehren von & Salomon, 2003, Volume 20 Issue 3), p.289.

Similar to the German system is the French system, not discussed here to avoid repetition, for more information on the French system of witness testimony in arbitration see: (Delvolvé, Pointon, & Rouche, 2009), p.125-129.

Sweden (a civil law country with an approach to witness testimony interestingly similar to common law practices) and China will be discussed. 3.1.1 Arbitration in the Netherlands 23.

In Dutch national court proceedings, documentary evidence is the main type of evidence. 73 Nevertheless, witness testimony may serve as evidence in civil procedures, even though it is viewed as unreliable by some practitioners.74 The evidentiary value of such evidence, is for the judge to decide. 75 Witnesses may be heard by the judge and the opposing party, although there is no common-law type cross-examination. 76 The hearing of witnesses can serve both the gaining of additional information to better understand the case, or as a way to diminish the credibility of the witness by bringing to light facts and circumstances that contradict its previous statements. 77

24.

In arbitration proceedings before the NAI (Nederlands Arbitrage Instituut) witness examination is “a common phenomenon”. 78 Nevertheless, witness testimony is not as commonly used in NAI arbitrations as it is in common law systems. Most procedures are conducted without hearing witnesses, due to the fact that witness testimony is seen as a potentially unreliable form of evidence.79 The cross-examination of witnesses is, if done at all, usually only conducted in international arbitrations. 80 The arbitral tribunal will then have an active role in the examination of witnesses, rather than leaving the direct - and cross-examination entirely to the parties. 81 According to article 29 (1) of the NAI 73

(Asser W. , 2013), §153: “The most general type of evidence both during trial and outside, is the document. It is both sustainable and tangible, simple and cheap to reproduce, it is such a normal and commonly used source of information that its evidentiary function does not immediately stand out in day -to-day life. However, in our procedural law, with its age-old tradition of documentation, the document has been the most important source of evidence for ages, especially because it has been intensively used since the time of the Roman empire, when legal actions were first documented.”, free translation from Dutch.

(Asser W. , 2013), §251, “Memory plays an important role in witness evidence. Not only because the human mind is no digital storage medium and is therefore often disappointing has witness evidence long had a [negative connotation]. The human mind was actually considered to be not integer, and neither was the information that came from it.”, freely translated from Dutch.

Article 152 Dutch CCP.

See paragraph 11.

ECLI:NL:PHR:2011, Hoge Raad 16 December 2011, para, 2.9.

Article 29 NAI Arbitration Rules; (Bend, Leijten, & Ynzonides, 2009), p.142-143.

(Bend, Leijten, & Ynzonides, 2009), p.142-143.

Arbitration Rules, the parties to the arbitration are free to decide on the manner of the witness examination. 82 If the parties fail to agree on the manner of examination however, the tribunal will decide instead how the witnesses are to be heard, in which case it “will generally be inclined to hear witnesses in the way it is done before the state courts in the Netherlands […] the arbitral tribunal will take the lead in questioning the witness”. 83 Although witness testimony may be provided in written form, the party submitting a written witness statement should make sure the witness is available for oral examination. 84 3.1.2 Arbitration in England 25.

In English arbitration proceedings, witness testimony is commonly used: “it is customary to present, at a time agreed or when ordered by the tribunal, the necessary witness statements”.85 Similar to English court proceedings, “the parties to an arbitration will often rely upon evidence from witnesses of fact in order to support their respective cases, in addition to the documentary evidence available”. 86 Typically, witnesses will submit a written witness testimony and will then, upon request by the arbitral tribunal or the opposing party, present themselves for cross-examination. 87 Direct testimony is thus replaced by the witness’ written testimony, which gives parties a chance to read it and prepare the cross-examination thoroughly rather than being confronted by an unexpected testimony and having to cross-examine right after hearing the direct-examination. 88 Under the English Arbitration act of 1996 parties are free to agree that there will be no cross examination. 89 This is however rarely done in contemporary English arbitration practice. 90 The rules of admissibility of evidence which take a prominent role in common law court proceedings, as discussed in chapter 2, do not play a major part in English arbitration. Rather, the tribunal is left to decide on the admissibility, relevance and weight of 82

(Chung, 2004), 182-183.

(Bend, Leijten, & Ynzonides, 2009), p.146.

(Bend, Leijten, & Ynzonides, 2009), p.139.

(Briner, 1997 Volume 13 Issue 2), p.162.

(Rawding, Fullelove, & Martin, 2013), p.380.

(Rawding, Fullelove, & Martin, 2013), p.380, See also Art. 20.4 of the LCIA Rules and Art. 25(3) of the ICC Rules.

(Hunter, 1997 Volume 13 Issue 3), p.352; “Usually, a witness statement submitted prior to the hearing will stand as the witness’ evidence in chief and the witness will be directly subject to cross -examination.”, (Rawding, Fullelove, & Martin, 2013), p.388.

Section 34(2)(f) of the Arbitration Act 1996, chapter 23, 17 June 1996.

(Rawding, Fullelove, & Martin, 2013), p.389.

evidence. 91 With regard to witness testimony, this means that there is still “a wide divergence of approach between individual arbitrators coming from different cultures”.92 International arbitrations in England, commonly taking place before the London Court of International Arbitration (LCIA) in accordance with its own arbitration rules - the LCIA Arbitration Rules - follow common international practice. 3.1.3 Arbitration in Sweden 26.

Sweden is a country quickly gaining in popularity as a venue for international arbitration. 93 Whereas Sweden is a civil law country, the right to cross-examination of witnesses is recognised in national courts 94 as well as in arbitration, and has been codified in the Swedish Arbitration Law. 95 Under the Swedish Arbitration Law cross-examination of a witness should at all times be possible when the other party requests it. However, this does not automatically mean that written statements are disallowed in case oral testimony cannot be given.96 It seems that in Swedish arbitrations, a view is taken close to that of the IBA Rules, according to which the tribunal decides on the admissibility of evidence, but the right to cross-examination is nonetheless codified. 97 Contrary to the IBA Rules however, Swedish law does not provide for the course to be taken in case of written testimony in absence of oral examination. 3.1.4 Arbitration in Germany

27.

In Germany witness statements are usually not part of court proceedings. 98 If they are used they have the same evidential value as other evidence, to be determined by the court. Witnesses may be required to swear an oath before testifying, and are directly questioned

Section 34(1) of the Arbitration Act 1996, chapter 23, 17 June 1996; in line with UNCITRAL Article 27(4).

(Hunter, 1997 Volume 13 Issue 3), p.352.

(Nilsson & Andersson, 2013), p.1-2.

European Judicial Network, 2005, found at <http://ec.europa.eu/civiljustice/evidence/evidence_swe_en.htm>

Article 28(3) of the Swedish Chamber of Commerce Arbitration Institute Rules dictates: “Any witness or expert, on whose testimony a party seeks to rely, shall attend a hearing for examinatio n, unless otherwise agreed by the parties”.

(Nilsson & Andersson, 2013), p.13.

See article 26 of the Swedish Arbitration Law (SCC): “The admissibility, relevance, materiality ad weight of evidence shall be for the Arbitral Tribunal to determine”, in conjunction with article 28(3) SCC as cited above.

(Sachs & Lörcher, 2007); p.322.

by the court. 99 The opposing party may not question the witness directly, but may submit questions to be asked of the witness. 100 28.

In arbitral proceedings, the tribunal may request written statements from the parties at its discretion. In international proceedings such has become standard practice. 101 Even though the practice of using written witness statements is aimed at easing the process of cross examination, German arbitration law does not provide for a right to cross-examination. A request to hear the opposing party’s witness may be denied when this request is clearly aimed solely at delaying the procedure. 102 In general, the probative power of a written witness statement is deemed lower than that of oral testimony in front of the tribunal, as the credibility of the witness cannot be tested by the arbitral tribunal. 103 3.1.5 Arbitration in China

29.

In Chinese national court proceedings, there is a right to cross-examination. 104 In principle, the mode of cross-examination is comparable to the common law type of examination, although Chinese law specifically provides for a prohibition on intimidating or insulting modes of questioning. 105 Chinese law explicitly states that witness evidence untested by cross-examination has no evidential value. 106

30.

Under Chinese arbitration law written witness evidence may be used, but only under the strict condition that the witness is available for cross-examination. 107 If cross-examination cannot take place, the testimony of the unavailable witness is inadmissible, and cannot be used as a basis for fact-finding. 108 Parties are furthermore entitled to cross-examine one another, and thus in general, oral testimony is an important part of Chinese arbitratio n.109 Under the Chinese European Arbitration Centre Arbitration Rules, a less strict approach is 99

Article 395(1) Zivilprozessordnung (ZPO); article 396 ZPO.

100

Article 397 ZPO.

101

(Sachs & Lörcher, 2007); p.323.

102

(Sachs & Lörcher, 2007), p.323.

103

(Sachs & Lörcher, 2007), p.323.

104

Articles 47, 156 CPL.

105

(Zimmerman, 2010), p.1025.

106

(Zimmerman, 2010), p.1025.

107

(Tao, 2012), p.149.

108

(Tao, 2012), p.149.

109

(Tao, 2012), p.149; the Chinese national court approach is much more limited and cross-examination is only available if the judge specifically allows for it, (Sinclair, 2010), p.25.

taken.110 Article 27 of said rules provides that the tribunal shall decide on the admissibility, relevance, materiality and weight of the evidence offered, which is the same key formulation as that of the UNCITRAL Rules. 111 It is also provided that statements by witnesses may be presented in writing. What to do with witness statements in writing which are unsupported by cross-examination is thus left to the tribunal. 3.2 31.

International Arbitration Practice

As several typical national arbitration laws have now been discussed, I will turn to the evaluation of international arbitration law instruments. What is the international arbitration practice on witness testimony? Is there consensus within international commercial arbitration despite the differences between national practices? There are several international arbitration laws and international arbitration institutes which each have their own arbitration rules. Some of the most important arbitral instruments and arbitration institutes will be discussed in connection with the issue of witness testimony, beginning with the UNCITRAL Model Law and the UNCITRAL Arbitration Rules. The IBA Rules will be introduced and their take on witness produced evidence will be discussed in the following chapter. 3.2.1 UNCITRAL

32.

The United Nations Commission on International Trade Law (UNCITRAL) is a UN committee devoted to “the progressive harmonization and modernization of the law of international trade”.112 In 1985, UNCITRAL published the first edition of the UNCITRAL Model Law on International Commercial Arbitration, which was designed to reflect international consensus on salient features of international arbitration practice, as well as to “assist states in reforming and modernizing their laws on arbitral procedure so as to take into account the particular features and needs of international commercial arbitration”.113 In particular, the UNCITRAL Model Law was drafted to aid states in modernizing their

110

CEAC Rules 2012, <http://www.cisg.law.pace.edu/cisg/moot/CEAC_Rules_2012_A5.pdf>.

111

UNCITRAL Arbitration Rules article 27.

112

(United Nations, 2013), p.3, 11.

113

UN Commentary on the UNCITRAL Model Law, found at <http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration.html >. The original version of the 21 June 1985 UNCITRAL Model Law can be found at <http://www.uncitral.org/pdf/english/texts/arbitration/ml-arb/06-54671_Ebook.pdf>.

arbitration laws to fit the regime of the 1957 New York Convention. 114 Thereto, certain key aspects of due process in international arbitration, such as the neutrality and independence of arbitrators and parties’ right to be heard, were codified in the UNCITRAL Model Law. 115 The latest version is dated 2006, and there is an abundance of case law on the model law.116 Many countries have adopted the UNCITRAL Model Law in some form or another, or have amended their national arbitration laws to at least reflect the principles found in the UNCITRAL Model Law.117 The Model Law has been adopted by the General Counsel of the UN, and has ever since gained a widespread acceptance in the international trade law community. The Model Law is said to “reflect worldwide consensus on key aspects of international arbitration practice having been accepted by states of all regions and the different legal or economic systems of the world”.118 33.

Aside from the model law, UNCITRAL developed the UNCITRAL Arbitration Rules. These rules are meant to serve as rules for ad-hoc arbitration, and enjoy widespread recognition in the world of international arbitration. They are commonly used or referred to or used as a basis for drafting arbitration rules. 119 After the introduction given to different legal systems in chapter 1 and to different arbitral procedural practices in paragraph 3.1, it should come as no surprise that rules as widely accepted in the international community as the UNCITRAL Rules, leave most disputed issues to the discretion of the tribunal. 120 The

114

Compare the ‘grounds for refusing recognition and enforcement’ under article 36 UNCITRAL Model Law to the article V of the 1957 New York Convention, the wording is almost an exact copy.

115

“The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case”, article 18 UNCITRAL Model Law; “in appointing an arbitrator [a court or other authority] shall have due regard to […] such considerations as are likely to secure the appointment of an independent and impartial arbitrator…” article 11(5) UNCITRAL Model Law; and “An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality or independence ”, article 12(2) UNCITRAL Model Law.

116

The cases selected by the international trade law committee of the UN to be most relevant to the explanation and further development of the rules are to be found in the UNCITRAL Digest of Case Law on the Model Law on International Arbitration, <http://www.uncitral.org/pdf/english/clout/MAL-digest-2012-e.pdf>. The Digest is published by UNCITRAL to further explain the principles underlying the rules, as well as to promote their uniform interpretation and applicability.

117

Some of these countries are for example: Australia, Belgium, Canada, China, Germany, the United Kingdom and Japan. The full list can be found at <http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration_status.html >.

118

UNCITRAL’s description of the model law on its website: <http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration.html >.

119

(Caron, Caplan, & Pellonpää, 2006), pn.

120

See also: (Binder, 2013), p.266.

same goes for the UNCITRAL Arbitration Rules, which are designed to be adopted by parties to an (ad-hoc) arbitration in their arbitration agreement. 121 With regard to the production and valuation of evidence article 27(4) UNCITRAL Rules states: “The arbitral tribunal shall determine the admissibility, relevance, materiality and weight of the evidence offered”. 34.

In the UNCITRAL Notes on the organization of Arbitral Proceedings 122, it is noted that parties should in advance of the proceedings reach agreement on the manner of taking witness evidence. On the subject of witness statements without oral examination the notes mention that whereas this might save time, it is not known in all parts of the world and “some practitioners disapprove of it on the ground that such contacts between the party and the witness may compromise the credibility of the testimony.”123

35.

The UNCITRAL Model Law nor the UNCITRAL Rules provide a clear answer as to whether or not cross-examination is allowed, and they provide no solution to the problem of written witness statements unsupported by oral examination. Although the existence of the problem is recognized in the explanatory notes, it would seem that the drafters of the UNCITRAL Rules have not dared to take a stance on this issue (yet). 3.2.2 LCIA

36.

The arbitration rules of the London Court of International Arbitration offer more guidance. Article 20.4 of the LCIA Rules states “Any witness who gives oral evidence at a hearing before the Arbitral Tribunal may be questioned by each of the parties under the control of the Arbitral Tribunal”.124 The solution adopted by the LCIA for written statements without oral examination is a clear one: “If the Arbitral Tribunal orders [a] party to produce the witness and the witness fails to attend the oral hearing without good cause, the Arbitral 121

Which can be done for instance, by adopting the model arbitration clause in article 35 of the UNCITRAL Arbitration Rules.

122

(UNCITRAL, 2012), to be found at <http://www.uncitral.org/pdf/english/texts/arbitration/arb-notes/arbnotes-e.pdf>.

123

The problem referred to is related to the fact that while in some instances written testimony might have been drawn up by a witness and signed by it, the more common practice is that the witness statement is edited by the parties’ counsel, or even drawn up entirely by the parties’ counsel and signed by the witness (Redfern, Hunter, Blackaby, & Partasides, 2009), p.401; (Baker & Davis, 1992), p.308; (AVCO Corp. c. Iran Aircraft Industries, 1988). For this reasons a written witness statement without oral examination can be “ of little probative value even if believed”, (Waincymer, 2012), p.885; see §4.2.

124

LCIA Arbitration Rules, <http://www.lcia.org/Dispute_Resolution_Services/LCIA_Arbitration_Rules.aspx >.

Tribunal may place such weight on the written testimony (or exclude the same altogether) as it considers appropriate in the circumstances of the case”. In other words: the tribunal has discretion with regard to the value of the statement.125 There is no obligation to cast it aside, but if the tribunal decides to ignore it for lack of credibility, this is not deemed prima facie contrary to a parties’ right to be heard. 126 It is clear from the text however, that crossexamination is the rule, and use of written testimony in lieu thereof is the exception. 127 3.2.3 ICC and ICSID 37.

The International Chamber of Commerce has its own arbitration rules, the ICC Arbitration Rules. Under the ICC Arbitration Rules, the issue of witness testimony is left untouched, the ICC Rules merely state that the arbitral tribunal shall “establish the facts of the case by all appropriate means”. 128 Nevertheless, in ICC practice, witness testimony is of great importance. Written witness testimony is commonly used, supported by oral examination. 129 The International Centre for the Settlement of Investment Disputes on the other hand, acknowledges the right to cross-examination of all witnesses (expert or fact). 130 It remains silent on the topic of valuation (and admissibility) of untested written testimony. 3.3

38.

The IBA Rules of Evidence

The IBA Rules on the Taking of Evidence in International Arbitration are a set of evidentiary rules prepared by the International Bar Association’s Working Committee consisting of lawyers from 11 different jurisdictions from all over the world, from both common law and civil law countries. 131 The ‘first edition’ rules 132 were published in 1983, 125

(Turner & Mohtashami, 2009), p.131.

126

(Turner & Mohtashami, 2009), p.133.

127

This reading is confirmed in (Simpson Thatcher & Bartlett LLP, 2008), p.119-123.

128

Article 25(1) International Chamber of Commerce Arbitration and Mediation Rules, to be found at <http://www.iccwbo.org/Products-and-Services/Arbitration-and-ADR/Arbitration/Rules-ofarbitration/Download-ICC-Rules-of-Arbitration/ICC-Rules-of-Arbitration-in-several-languages/>. “Among the matters left to be settled by “appropriate means” are such questions as the nature and sequence of the parties' further written submissions, the rules that should govern the production of evidence, including its admissibility, materiality and weight, (207) and the calling and examination of witnesses. ”, (Derains & Schwarz, 2005), p.272; For the treatment of this issue in intellectual property arbitration, a common type of arbitration before the ICC, which is slightly different but falls outside the scope of this thesis, see: (Cook & Garcia, 2010), p.182.

129

(Grierson & van Hooft, Alphen aan den Rijn), p.168-169.

130

Article 28 ICSID Arbitration Rules, to be found at <https://icsid.worldbank.org/ICSID/ICSID/RulesMain.jsp>.

131

Foreword to the IBA Rules, (Subcomittee, 2010), p.10.

but were found to be “a somewhat uneasy compromise between the common law and civil law systems”.133 In 1999 and 2010 revised editions of the rules have been published, which have received far greater support in the international arbitration community. 134 The IBA Rules provide parties and tribunals with a set of evidentiary rules in order to settle disputes regarding discovery135 and witness testimony. The advised manner of using the IBA Rules is by either agreeing to their application in the arbitration agreement, or by deciding on their application after a dispute has risen. 136 Naturally, arbitral tribunals not (yet) bound by any set of evidentiary rules are under most arbitration laws and statutes ‘free to decide on the admissibility, weight, materiality and relevance of evidence’, and are thus also free to decide on applicability of the (whole or part of) the IBA Rules, or to use them as guidelines.137 The IBA Rules were “designed to be used in conjunction with, and adopted together with, institutional or ad-hoc arbitration rules”.138 39.

A 2012 study by the School of International Arbitration at Queen Mary University of London and White & Case LLP shows that the IBA Rules are used in 60% of the arbitrations world-wide. In 53% they are used as guidelines, but only in 7% they are used as binding rules. 139 The fact that only in such a small percentage of cases the IBA Rules are adopted as binding rules may be explained by the fact that they provide that witness evidence untested by cross-examination is inadmissible, which seems to be a common-law oriented approach. This issue is further discussed in paragraph 4.4.

132

The so called “IBA Supplementary Rules Governing the Presentation and Reception of Evidence in International Commercial Arbitration”, foreword to the IBA Rules, IBA Rules p.10.

133

(Bühler & Dorgan, 2000), p.5.

134

(Queen Mary University of London; School of International Arbitration, 2012) ; (Bühler & Dorgan, 2000), p.5-6; (Segesser, 2010), p.735-752.

135

The issue of ‘discovery’, a manner of gathering evidence known to common-law countries is another big difference between common law and civil law systems, and is therefore also a major discussion point in international arbitration. It is also one of the issues governed by the IBA Rules, but to discuss it in this thesis would require at least as much space as the issue at hand and is therefore, unfortunately, left for discussion in another paper. For more information, see: (Hinchey & Baer, 2001), p.207-227; (O'Malley, 2012); (Bishop & Kehoe, 2010), p.512; (Center for International Legal Studies, 2001), p.183-185.

136

And thus agreeing on them in an ‘ad-hoc’ fashion, leaving room for deciding whether or not the IBA Rules are fit for the dispute at hand; see also preamble to the IBA Rules and: “the IBA Rules […] are optical and need to be adopted”, (Lew, Mistelis, & Kröll, 2003), p.554.

137

The latter is the most common use, see (Queen Mary University of London; School of International Arbitration, 2012); (Kühner, 2010), p.665.

138

(Lew, Mistelis, & Kröll, 2003), p.556.

139

(Queen Mary University of London; School of International Arbitration, 2012) .

3.4 40.

Conclusion

The different approaches taken to witness produced evidence in national courts in civil law and common law countries have clearly had ample effect on the choices made in drafting national arbitration laws. In civil law countries, arbitration tends to focus less on witness testimony in comparison to the witness-focused common law arbitrations. In German national arbitrations there is usually no witness testimony, but in German international arbitrations there is. The same applies to Dutch arbitration. English arbitral proceedings nearly always grant a right to cross-examination of witnesses and tend to focus heavily on witness produced evidence, but in international arbitrations (before the LCIA) a somewhat less common law oriented approach can be seen. 140 International arbitration rules remain mostly silent on specific evidentiary issues, and generally leave all matters regarding admissibility, weight and relevance of evidence to the tribunal. 141 In order to have a widespread applicability and use in both common law and civil law arbitrations, this seems the easiest solution. Nevertheless, parties will at some point be requiring the arbitral tribunal to make some choices regarding witness evidence. Other than having full discretion, there seems little guidance to evidentiary proceedings to be found in contemporary international arbitration instruments. The next chapter will discuss the use of witness testimony in international arbitration further, as well as the IBA rules on this particular issue.

41.

Written witness statements and cross-examination in international arbitration

Witness testimony is an important source of evidence in international arbitration. 142 In fact: “while certain arbitrations may be suited to adjudication upon documents alone, most cases that arise in international commercial arbitration involve the presentation of witnesses”.143 This chapter will explore the use of written testimony, which is, as shall be

140

And sometimes, cross-examination is waived entirely by the parties, see 3.2.2.

141

“All of these rules – like the latest draft of the proposed UNCITRAL Model Law – to a large extent duck the difficult issues by leaving to the agreement of the parties the actual procedure to be followed and, failing such agreement, to the discretion of the arbitrators.”, (Shenton, 1985 Volume 1 Issue 2), p.119.

142

(Born G. B., 2011), p.759.

143

(Bühler & Dorgan, 2000), p.4.

demonstrated, closely linked to the issue of cross-examination of witnesses. 144 Next, the right to cross-examination is discussed, after which the IBA Rules are turned to. 4.1 42.

The use of written witness testimony in international commercial arbitration

In contemporary international arbitration practice, in order to save time and resources, witnesses are often interviewed prior to the actual arbitral hearings. 145 The witness’ testimony is then transcribed and sent to the tribunal and the opposing party. 146 In this way, parties will be aware of the testimonies relied on by the other party, and during the final hearings the witness’ written testimony can stand as its ‘testimony in chief’, meani ng that it will replace the direct examination of the witness to obtain its statement on relevant issues.147 The only part left for the hearings is the cross-examination of the witnesses by the tribunal and by the opposing party. 148 The use of written witness statements prior to examination thus promotes efficiency, and “provide[s] a fair and efficient compromise to the conflicting cultural practices that arise in an international arbitration”.149 4.2

43.

The right to cross-examination in international commercial arbitration

One of the major problems with written witness statements is that they might have been drawn up by a party’s legal counsel rather than the witness itself. 150 Even though the risks of overly-edited witness statements are commonly known, witness statements are still often reshaped to fit the exact line of argumentation of counsel. 151 In such a case “written witness statements can bear little relation to the independent recollection of the factual witness,

144

“Typically, oral testimony is offered only to support affidavit evidence already submitted. ”, (Bishop, Crawford, & Reisman, 2005), p. 1464.

145

“The use of written witness statements can enhance the efficiency and shorten the overall duration of the proceedings, thereby potentially reducing costs.”, (Bühler & Dorgan, 2000), p.12; (Bishop & Kehoe, 2010), p.554; (Bienvenu & Valasek, 2004), p.238-242.

146

(Dewitt Wijnen, 2010), p.355.

147

(Blackaby, Direct and Re-direct Examination of the Witnesses, 2010), p. 387; Article 8(3) IBA Rules; this is similar to the way this is done in English arbitrations, see 3.1.2.

148

(Bishop & Kehoe, 2010), p.585.

149

(Wolf & Preteroti, May-July 2007), weblog, under ‘conclusion’: “Witness statements…unfair surprise at the hearing”.

150

“Sometimes the written witness statements have clearly been drawn up by educated legal advisors and signed by the witness, sometimes the written statements appear genuine”, translated from Dutch (Asser, 2013), §174; “Written submissions can be researched, reviewed and perfected.”, (Blackaby, Arbitration Advocacy in Chancing Times, 2010 Volume 15), p.118.

151

(Zuberbühler, Hofmann, Oetiker, & Rohner, 2012), p.96.

with draft after draft being crafted by the party's lawyer or the party itself, with the witness' written evidence becoming nothing more than special pleading, usually expressed at considerable length. It rarely contains the actual unassisted recollection of the witness expressed in his or her own actual words”.152 Apart from the question who actually drew up the statement, there are other issues with witness testimony. 4.2.1 Untruthful witness testimony: criminal prosecution, unenforceability or civil liability? 44.

In court proceedings, being untruthful in front of a judge or jury is considered perjury, and is prosecutable by law in most countries, civil law as well as common law.153 This is not necessarily the case in arbitration. Although the definition of perjury differs per jurisdiction, the main characteristics are that a person has given testimony under oath 154 in a judicial proceeding in which the person accused of perjury has testified, which testimony was material to the outcome of the case and was deliberately false155, for the purpose of having it believed. 156

45.

It is thus required that the testimony was given under oath.

157

An oath must be

administered by a person authorized or required by law to do so, which is something of a problem in an ad-hoc arbitration under laws which do not permit an arbitrator to administer an oath. For example, the Japanese and French arbitration laws do not recognise such power. 158 English, American and Belgian arbitration laws do recognise the power of arbitrators to administer an oath. 159 International arbitration laws mostly remain silent on

152

(Lévy, 2005), p. 79; see also (Born G. B., 2011), p. 760; (Waincymer, 2012), p.885 and (AVCO Corp. c. Iran Aircraft Industries, 1988).

153

See for instance: Dutch penal code article 207, 207a and 207b; 26 Internal Revenue Code (US) paragraph 6065 or the 1911 UK Perjury Act, found at <http://www.legislation.gov.uk/ukpga/Geo5/1-2/6>.

154

An oath that has been administered by one who is competent to do so and the oath or affirmation is required or authorized by law, (Tidwell, 1983), p.45.

155

“given willfully, corruptly, and with knowledge of its falsity (or given recklessly) ”, Commonwealth v. Russo, 177 Pa. Super. 470, 111A2d 359 (1955), as cited in (Tidwell, 1983), p.44.

156

(Tidwell, 1983), p.44.

157

If the oath was not administered in accordance with the law, there is no perjury. For a Dutch example, see: LJN: BP3839, Hoge Raad, 19 april 2011.

158

Article 795 para 2 Japanese Code of Civil Procedure; article 1461 French Code of Civil Procedure.

159

Section 38(5) English Arbitration Act 1996; section 7(a) Uniform Arbitration Act of the United States of America; article 1696(4) Belgian Code of Civil Procedure.

the topic of testimony under oath. 160 As criminal prosecution for perjury is only possible if the criminal qualification of perjury is met, and the affirmation or oath is a requirement of that qualification, it is rare for witnesses in international arbitration to be liable to perjury charges given that they rarely testify under sworn oath. 161 In some countries the assistance of a national court can be sought to administer an oath, but the refusal of a witness to take an oath will usually lead to the arbitrator drawing an adverse inference rather than seeking assistance in forcefully obtaining the witness’ testimony under oath. 162 46.

Apart from criminal prosecution, it is imaginable that a witness who wilfully t estifies falsely in order to stimulate a certain outcome of the proceedings would be held liable in a civil suit. A problem with this approach is, that a witness who has to fear civil liability should his testimony be found to be false in some way, might be reluctant to speak his mind altogether for risk of being personally liable in a case that he might not even have any personal interest in. Furthermore, the privileged character of arbitration proceedings and the confidential sphere in which they are held will usually prevent anything said during such confidential proceedings to be used anywhere outside the proceedings.

47.

Lastly, one might wonder if an arbitral award that is based largely on a false witness testimony could be deemed unenforceable under the 1957 New York Convention, for lack of a fair trial. 163 However, this would lead to a procedure after the arbitral procedure, in which it would have to be established that the testimony of a witness deemed by the tribunal to be true, is in fact untrue. This, in practice, means that whereas arbitration is meant to be a ‘one-stop-shop’, a final and binding form of dispute resolution, the possibility is wide-open to question the veracity of the evidence presented during the arbitral proceedings in a national court. The ruling of the national court would then in turn, be vulnerable to appeal, meaning that it would be possible for an arbitral award to be overthrown on the basis of evidence evaluation years after granting the final award.

48.

For the above reasons, the valuation of the truth of a witness’ statement is to be done in the arbitral proceedings alone. How? By cross-examination: “Vigorous cross-examination of 160

For example, the AAA International Arbitration Rules, ICC and UNCITRAL Rules; the AAA Commercial Arbitration Rules do state that testimony under oath may be required by an arbitrator, see:

161

(Sanders, 1999), p.249-250.

162

(Sanders, 1999), p.257.

163

The fair trial exception is part of the ‘contrary to public policy’ exception of the New York Convention, article 5(2)(b); (Maurer, 2012).

the perjured testimony through the use of prior inconsistent statements, or contradictory testimony will put the arbitrator on notice of the perjured or inconsistent testimony. The arbitrator can then weigh and evaluate all the evidence to include the questionable testimony and make his or her decision accordingly. The arbitrator is in the best position to evaluate all testimony, to include any perjured testimony, and determine the outcome of the case.”164 49.

Even if lying to an arbitral tribunal was equally punishable by law as is perjury, there is still the question whether or not the threat of a perjury charge or civil liability will withhold the witness from lying. According to Asser, this is not the case. 165 In his view, the threat of criminal prosecution is a form of mistrust towards the witness, even before he or she starts testifying: “the [threat of criminal prosecution] can be intimidating and intimidation of a witness is not the most suitable method of stimulating a trustworthy testimony”166. 4.2.2 Trusting witness testimony

50.

Apart from the effect of the threat of criminal prosecution or civil liability there is still the question whether or not a witness who attempts to be truthful, can provide a testimony that is accurate and useful. There have been numerous scientific studies on the capability of the human mind to actively remember facts from its own experience, some of those studies give little hope of establishing the truth after the passing of time.167 For example, in the mid 70’s Elizabeth Loftus has experimented with the introduction of false facts to humans, and the effect this has on their memory: “Subjects were shown a slide of a car at an intersection with either a yield or a stop sign. Experimenters asked participants questions, falsely introducing the term “stop sign” into the question instead of referring to the yield sign participants had actually seen. […] The results indicated that subjects remembered seeing the false image”.168

51.

From a legal perspective, one might wonder if the same phenomenon could occur when witnesses are confronted by a party’s representative who asks them to answer certai n 164

(Tidwell, 1983), p. 47. Similar conclusion supported by (Hanotiau, 2003), p.267.

165

(Asser W. , 2013), §254-255.

166

(Asser W. , 2013), §255, translated from Dutch.

167

(Crombag, Koppen, & Wagenaar, 1992), as cited in (Asser W. , 2013), §252.

168

(Fisher & Tversky, 1999), p.26.

questions about relevant facts for the purpose of drawing up a written witness statement. 169 Other studies have shown for example that witnesses who (in criminal trials) choose a perpetrator in a police line-up as the person they have seen at the scene of the crime, are likely to pick the same person in later line-ups, even when the first line-up did not contain the actual perpetrator and the later line-up did.170 52.

Even if the witness does fully and correctly remember the facts and circumstances relevant to the testimony, there are other issues to consider, such as party-witnesses who might have a particular interest in the outcome of the arbitration. Another problem is the differences in ability of witnesses to express themselves, possibly leading to an advantage for a party who’s witness is the better communicator. 171 Cross-examination should provide counsel with an opportunity to pick up on these differences, and ask critical questions so as to see behind any communicative barriers.

172

Naturally, witnesses brought up for cross-

examination are usually well-prepared, so it takes skill to expose an untruthful witness. 173 That does not change the fact that when there is no cross-examination, there is far less chance to show the tribunal that a witness is untruthful, or in fact hasn’t written the statement himself. 174 53.

For these reasons, a party “has to have a real possibility to test, question and challenge the evidence presented by the other party, and provide alternative evidence. This way, the right to cross-examine a witness is in principle a part of due process.” 175 Oral crossexamination is in fact considered standard international practice in international arbitrations. 176 Many arbitration statutes explicitly provide for the right to examine the

169

Asser reaches a similar conclusion in (Asser W. , 2013), §252, where he states that (freely translated) the human memory is not flawless, and might be influenced by many factors outside of the parties’ influence.

170

(Fisher & Tversky, 1999), p.27.

171

Although this can also be an issue working against a witness, “The influence of the lawyers in drafting a witness’ evidence can be particularly evident when, during a hearing, it becomes clear that the witness does not have a command of English to match the eloquence of his written statement.”, (Sinclair, 2010), p.31.

172

On linguistic problems with witness testimony in international arbitration, see: (Ulmer, 2011 Volume 28 Issue 4), p.298-301.

173

On the do’s and don’ts of cross-examination, see: (Kehoe, 2010), 405-430.

174

On the preparation of witnesses, see: (Kirby, 2011 Volume 28 Issue 4), p.401-406.

175

(Kurkela, 2010), p.168.

176

(O'Malley, 2012), p.105; (Redfern, Hunter, Blackaby, & Partasides, 2009), p.402; (Bühring-Uhle, Kirchhoff, & Scherer, 2006), p.71.

opposing party’s witnesses. 177 During the process of cross-examination, the opposing party can attempt to show that the witness is untruthful, or untrustworthy, by asking specific questions regarding the witness’ testimony. Cross-examination is found to be a very effective manner of testing the credibility of a witness. 178 4.3 54.

Written witness testimony in lieu of oral testimony

Cross-examination thus functions as a useful tool to test the credibility of a witness. 179 But what is to be done with the witness statement of a witness who fails to appear for oral examination? One option would be for the tribunal to draw an ‘adverse inference’, meaning that the tribunal will weigh the non-appearance of the witness while deciding the value of the evidence produced by it.180 In other words, the tribunal would be free to decide not to attach any evidentiary value to such a witness statement. If an arbitral tribunal would grant full evidentiary value to a witness statement untested by oral examination, this might lead to one party not having a fair opportunity to present its case, leaving the award vulnerable to challenge and possibly causing problems for the enforcement thereof: “The witness who provides a written statement in an arbitration will normally appear at a hearing, where he will confirm the statement. The statement does not stand alone as evidence unless accepted as such by the parties”.181

55.

In Generica Limited v. Pharmaceutical Basics, Inc. (1997), an arbitral award was challenged for one party’s alleged lack of opportunity to present its case. The party in question had in fact been given the opportunity to cross-examine the opposing party’s witness, but the cross-examination was ended by the tribunal before the questioning party could finish because of time constraints. The US Court of Appeals decided that because the tribunal had stated that it would “attach little or no weight” to the witness statement of a 177

See for example: articles 22(4) ICC Rules (as discussed in §3.2.3); 20(3-6) LCIA (as discussed in §3.2.2); 20(2) AAA and 35(6) ICSID (as discussed in §3.2.3).

178

(Lévy, 2005), p.120; (Petrochilos, 2004), p.222 and (Fouchard, Gaillard, Goldman, & Savage, 1999), p.698 -703.

179

(Kehoe, 2010), p.405-430.

180

The failure to make evidence available according to article 9(6) IBA Rules: “If a Party fails without satisfactory explanation to make available any other relevant evidence, including testimony, sought by one party to which the Party to whom the request was addressed has not objected in due time or fails to make available any evidence, including testimony, ordered by the Arbitral Tribunal to be produced, the Arbitral Tribunal may infer that such evidence would be adverse to the interests of that Party.”

181

(Bühler & Dorgan, 2000), p. 14; challenge of an award can occur if a party has not been given a fair opportunity to present its case, for instance under article 34(b)(ii) UNCITRAL Model Law. See also: UNCITRAL Digest on article 34(b)(ii).

witness who was not subjected to full cross-examination, the challenging party had in effect not been denied a fair opportunity to present its case. 182 56.

In Paklito v. Klöckner (1993), the High Court of Hong Kong held that because there had been no cross-examination of a witness providing written testimony even though such cross-examination had been requested, there had been no fair opportunity for the requesting party to present its case. 183 The enforcement of the arbitral award was subsequently denied on grounds of violation of public policy. 184

57.

The issue becomes even more apparent when one parties witness can be cross-examined, but the other party’s witness is unavailable and thus only represented through a written witness statement. Equality of arms as a basic principle of due process counts in arbit ration as much as in court proceedings, and “each party must be afforded a reasonable opportunity to present his case – including his evidence – under conditions that do not place him at a substantial disadvantage vis-à-vis his opponent”.185

58.

Nevertheless, denying the admissibility of a written witness statement altogether for lack of cross-examination might cause problems as well. After all, what fair opportunity to present its case does a party have left if their only piece of evidence is a witness statement of a witness who is no longer under their control (for instance because he has left their employment or even moved to another continent)? Bühler and Dorgan state with regard to this issue: “Even if there is a perfectly valid reason for the witness’ absence […] the absence of the witness will have deprived the opposing party of its opportunity to cross examine the witness”. Although each party has the responsibility of bringing before the tribunal whatever evidence it intends to rely on, meaning it should also bring its own witnesses,186 there can be situations when the outcome is unfair, especially where it results in the only piece of evidence available to a party being inadmissible.

182

(Generica Limited v. Pharmaceutical Basics, Inc., 1997), §70; an a contrario reasoning leads to the conclusion that the challenge would have had a chance of success had the tribunal attached full evidentiary weight to the testimony. See also: (S.D. Myers, Inc. v. Canada, NAFTA, Partial Award, 2000), where the right to crossexamination in arbitration was confirmed once more.

183

(Paklito v. Klockner, 1993) as cited in (Alvarez, Kaplan, & Rivkin, 2003), p.250-251.

184

(Paklito v. Klockner, 1993) as cited in (Alvarez, Kaplan, & Rivkin, 2003), p.250-251; the public policy exception is recognized under article V(2)(b) of the New York Convention, see also: (Maurer, 2012).

185

(Dombo Beheer B.V. v. The Netherlands, 1992), §33.

186

(O'Malley, 2012), p.128; (Lew, Mistelis, & Kröll, 2003), p.573 and (Bühler & Dorgan, 2000), p.19-20.

59.

In conclusion, the right to cross-examination is usually granted in international commercial arbitration although parties can choose otherwise, or the tribunal can direct otherwise.187 It is common practice to produce a written witness statement before offering the witness up for cross-examination. If there has been no request to examine the witness and the tribunal has not ordered its appearance, the written witness statement will suffice. 188 The written witness statements submitted in advance of any oral hearing are used as supplementary evidence, to make the hearings more efficient. If there is no oral examination, this has implications for the credibility of the written statement, but the tribunal is free to admit it and decide on its value on its own accord, unless the IBA Rules are applied strictly. 4.4

60.

Article 4.7 of the IBA Rules

Under most sets of arbitration rules, the tribunal is free to decide on the weight, admissibility, relevance and materiality of all evidence. For example, the UNCITRAL Arbitration Rules provide that “The arbitral tribunal shall determine the admissibility, relevance, materiality and weight of the evidence offered`.189 Other examples of the same formula are found in article 27(4) CEAC Rules, article 22.1(f) LCIA Rules and article 34(1) ICSID arbitration rules. Article 9(1) of the IBA Rules provides the same freedom to the tribunal with regard to evidence, with one exception, which is the admissibility of written witness testimony unsupported by oral examination.

61.

Article 8.1 of the IBA Rules provides: “Within the time ordered by the Arbitral Tribunal, each Party shall inform the Arbitral Tribunal and the other Parties of the witnesses whose appearance it requests.” Article 4.7 of the IBA Rules provides: “If a witness whose appearance has been requested pursuant to Article 8.1 fails without a valid reason to appear for testimony at an Evidentiary Hearing, the Arbitral Tribunal shall disregard any Witness Statement related to that Evidentiary Hearing by that witness unless, in exceptional circumstances, the Arbitral Tribunal decides otherwise.”190

187

(Bühler & Dorgan, 2000), p.20.

188

(Asser, 2013), §176. Not requesting the examination of the opposing party does not have any implications as to recognizing the validity or truth of the statement, see also article 4(8) of the IBA Rules: “ If the appearance of a witness has not been requested pursuant to Article 8.1, none of the other Parties sh all be deemed to have agreed to the correctness of the content of the Witness Statement.”.

189

UNCITRAL Arbitration Rules article 27(4).

190

Emphasis added.

62.

The ‘valid reason’ exception of article 4(7) is highly restrictive. Known examples of situations where such an exception was accepted were the death of a witness and the serious illness of a witness confirmed by a physician.191 Even under those circumstances, though the witness’ testimony was accepted, the evidential value thereof was demised by the non-appearance of the witness. 192

63.

Exceptional circumstances to allow a witness’ testimony despite its absence without a valid reason could be that the witness’ testimony is exactly in line with other evidence produced by a party, but even then the evidential value of such a statement is clearly only secondary. The exceptional circumstances mentioned in article 4(7) IBA Rules are recognized rarely, and witness testimony used to prove new facts that have not already been established by other evidence will thus not be allowed in the absence of cross-examination. Especially in circumstances where the evidence provided in a witness’ testimony is crucial to the outcome of the case, the opposing party will want to cross-examine the witness. The effect of this provision is thus that whenever the evidence produced by a witness is relevant to the outcome of the case and not only in support of other evidence, the witness will have to be available for cross-examination.

64.

In short, these two rules combined lead to the conclusion that under the IBA Rules any witness who provides a written testimony may be requested to appear for oral examination, and that, failing such appearance, the tribunal must disregard the written witness statement entirely, thus rendering said statement inadmissible. Although there are authors who completely support this view 193, it can be argued that there are some issues with the strict application of article 4(7) of the IBA Rules.

65.

It seems to be contrary to the flexibility of the proceedings and the ability to tailor them to the exact needs of the dispute at hand to apply strict rules of admissibility; “most modern arbitration laws recognise that procedural flexibility is one of the paramount considerations in international commercial arbitration. This principle extends to the taking of evidence, the admissibility of evidentiary means and the probative value the tribunal

191

(O'Malley, 2012), p.130.

192

(O'Malley, 2012), p.130.

193

For example: “Arbitrators usually impose as a condition for the admission of written witness testimony that the witness be made available for questioning during the hearing upon the demand of the other party. ”, (Mehren von & Salomon, 2003, Volume 20 Issue 3), p.288.

attaches to them.”194 Normally, the logical step to take in arbitration when evidence is not convincing, is to simply attribute little or no weight to it: “The weight given to the evidence of the parties will be assessed according to the effectiveness with which that evidence may be tested”.195 There are almost no strict rules of admissibility in international arbitration rules, instead, tribunals will admit the evidence and then use their discretion in weighing evidence to attach less value to evidence they trust less, but they will read whatever the parties put forward.196 For example, the use of party witnesses and the weighing of their testimony is left entirely to the tribunal under the IBA Rules. 197 66.

In practice, it is highly uncommon to limit the admissibility of evidence in international arbitration. 198 This has to do with the fear of arbitrators that the award they produce will be unenforceable because one party was unable to present its case. 199 A more liberal approach to admissibility is usually preferred. 200 As discussed earlier, there are serious risks involved in disallowing evidence entirely. 201 One party might successfully challenge the award or bar its enforcement for lack of ability to present its case.

67.

Furthermore, it seems strange to distrust the arbitral tribunal to attach proper value to an untested witness statement, considering the background of the admissibility rules as discussed in paragraph 1.2.2, being amongst others protection of the lay members of a jury against misleading testimony. As arbitrators are selected for their professional qualities, it is difficult to see why such strict rules of admissibility should apply. For this reason, several authors explicitly advise against full and unchanged adoption of the IBA Rules of evidence.202

194

(Lew, Mistelis, & Kröll, 2003), p.558.

195

(Lew, Mistelis, & Kröll, 2003), p.563.

196

(Lew, Mistelis, & Kröll, 2003), p.565.

197

Article 4(2) IBA Rules.

198

(Bend, Leijten, & Ynzonides, 2009), p.143; (Mehren von & Salomon, 2003, Volume 20 Issue 3), p.290.

199

Article V(1)(b) New York Convention; (Mehren von & Salomon, 2003, Volume 20 Issue 3), p.290.

200

(Oetiker, 2007 Volume 25 Issue 2), p.260-261.

201

See the due process requirements discussed in §4.2.

202

See for example: (Bühler & Dorgan, 2000), p.6; (Zuberbühler, Hofmann, Oetiker, & Rohner, 2012), p.101-102.

68.

Conclusion

5.1

Summary

First, the differences between common law and civil law have been discussed. It became clear that civil law is traditionally document oriented and somewhat distrustful of witness evidence, and that in civil law professional judges are relied upon, giving less need for strict rules of evidence. In common law on the other hand, witness testimony plays a very important part in court litigation. This has to do with the traditional form and structure of common law judiciary systems, where lay juries, often illiterate, had to be protected against misleading evidence. It is mainly for this reason that strict rules of admissibility of evidence are still found in common law jurisdictions.

69.

Subsequently, it was discussed that the different approaches to evidence in civil law and common law countries have largely translated to the national arbitration procedures of those countries. Several examples have been given, and the arbitration laws of several countries have been evaluated in short. Then, transnational instruments of arbitration law have been discussed, primarily the UNCITRAL Model Law, the UNCITRAL Arbitration Rules, and the institutional rules of the LCIA, ICSID and ICC, and the IBA Rules on the Taking of Evidence. It became apparent that whereas the effect of national judicial traditions on national arbitration laws were clearly visible, in international arbitration the division between common law and civil law is far less apparent. Transnational instruments gain popularity all over the globe, but remain mostly silent on disputed issues such as witness testimony and written witness statements.

70.

Thereafter, witness testimony was viewed from a legal- and psychological perspective, leading to the conclusion that written testimony cannot simply be accepted as representing the true recollection of facts by the witness. It became evident that cross-examination is not only a remnant of common law perspective in international arbitration, but may also be a necessary tool to provide each party to an arbitration a full opportunity of presenting its case, and of testing the evidence brought against it.

71.

Finally, the status of written witness testimony in lieu of oral examination was discussed against the background of common and civil law perspectives and the IBA Rules on the Taking of Evidence. The conclusion to be reached there was that the use of written

testimony is very common in international arbitration, but it should at all times be accompanied at least by the possibility of oral examination. Although most arbitration rules provide the tribunal with the freedom to decide the admissibility, weight and r elevance of any evidence.203 The IBA Rules however, direct a strict approach to unsupported written testimony: it should be disregarded if it is relevant to the outcome of the case. Contemporary arbitration practice seems to take a more liberal approach, leaving the effect of the absence of oral examination to be determined by the arbitral tribunal. Only in 7% of arbitrations worldwide are the IBA Rules actually adopted as strict rules. 5.2 72.

What to do with the IBA Rules?

As discussed, one of the reasons to opt for arbitration is the flexibility of procedure. Arbitration can be a solution when there are strict time constraints, but also when a procedure requires special knowledge beyond the skill of national court judges. It seems to me that there is no place for strict rules of admissibility of evidence in international arbitration. Leaving evidentiary matters to the tribunal seems a fair solution, after all the tribunal is selected for its skill and competence. This is what nearly all international arbitration rules provide. 204 The reasons that seem to have led to strict evidentiary rules simply do not apply in arbitration, where there are no lay juries, and there are no illiterate arbitrators. Nevertheless, there may be situations where parties require clarity on the procedural rules to be followed. Are they allowed to interview their witnesses prior to the hearings? Are they allowed to contact them at all? If there will be oral testimony, will there be cross-examination? These are things that need to be known early on in the arbitral procedure in order to prepare properly for the final hearings.

73.

However, adopting the IBA Rules in full prior to any dispute (for instance, in the arbitration agreement) unnecessarily limits the flexibility of the procedure. On the other hand, adopting them ad-hoc, while a dispute has already risen may not always be a solution. At that time, parties will have information about the substance of the dispute, and will be able to use that information to bar the strict applicability of evidentiary rules to their advantage.

203

See paragraph 60.

204

See paragraph 60.

74.

I agree with authors who view the IBA Rules with some criticism regarding its admissibility rules.

205

A tribunal should be deemed capable of weighing all the

circumstances of a specific case in deciding whether or not there should be cross examination, whether the use of written statements is allowed and whether or not they deserve any evidentiary value. It is the trust of the parties in the individual arbitrators that has led to their appointment as arbitrators, and it is that trust in the capabilities of the arbitrators to come to fair and equitable solutions that should prevail when it comes to decisions on the admissibility and weight of evidence.

205

See paragraph 67.