Rules of Evidence in International Arbitration

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Party-appointed experts


5.01 There are essentially two modes of presenting expert testimony in an international arbitration. The first is through introduction by a party of an expert’s testimony in support of their case. Such witnesses are often referred to as the “party-appointed” expert, a designation indicating that the expert is instructed and compensated by a party for his or her work. This approach is to be distinguished from the tribunal-appointed expert. As the phrase suggests, the tribunal-appointed expert is retained to work on behalf of the tribunal, and does not accept direct compensation for his work from either party, and is instructed by the tribunal. While will deal extensively with the use of tribunal-appointed experts, the following chapter is devoted to article 5 of the IBA Rules, which covers party-appointed expert witnesses. 5.02 The expert’s opinion is generally given in regard to factual issues which present particularly difficult questions for a tribunal. Thus the role of the party-appointed expert in international arbitration is to contribute to establishing, through his or her specialist testimony, certain conclusions regarding aspects of a case. Often referred to as “technical issues”, the questions submitted to an expert for consideration may in fact cover a wide variety of subject matter. In this respect, it is important to note that article 5 of the IBA Rules does not impose any limitations on which issues a party may submit expert testimony on. However, as is discussed in the comments to article 5.1, the tribunal is equally free to ignore an expert’s report if it is immaterial to the final award. 5.03 In the modern practice of international arbitration, the use of party-appointed experts has eclipsed the use of tribunal appointed experts. This may be the case for any number of reasons, but it would seem there are grounds for both the parties and arbitrators to prefer party-appointed experts. For the parties, this may be the case because they have greater control over the matters that will be put to the expert for his or her opinion, which arguably pares down the potential for irrelevant testimony. For the tribunal, this approach may be preferred because it relieves the arbitrators of the logistical and procedural responsibility of appointing an expert. 5.04 The above notwithstanding, there are counter arguments against the use of the party-appointed expert. In particular, some commentators regret the development of the “battle of the experts”, which is a reference to the situation where two opposing experts offer contradictory positions by relying on technical jargon that is seemingly irreconcilable. In such a case a tribunal may feel at a loss to determine which expert is correct. While such a possibility is accepted, as will be discussed in the comments below to article 5.4, techniques have been developed for aiding the Tribunal in dealing with this “battle”.

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Party-appointed expert’s testimony in international arbitration generally

Article 5.1 2010 IBA Rules: party may rely on a Party-Appointed Expert as a means of evidence on specific issues. Within the time ordered by the Arbitral Tribunal, (i) each Party shall identify any Party-Appointed Expert on whose testimony it intends to rely and the subject-matter of such testimony; and (ii) the Party-Appointed Expert shall submit an Expert Report.

General discussion

5.05 The language in article 5.1, which includes the statement that “a party may rely on a Party-Appointed Expert as a means of evidence”, confirms the widely accepted view in international arbitration that the use of such experts by parties to support their case is acceptable. While for common law lawyers an affirmation of this principle may seem unexceptional, since party-appointed expert testimony is widely used in such jurisdictions, those of the civil law tradition may not as readily accept such a proposition. It is reported that the use of a party-appointed expert remains controversial in some civil law jurisdictions.1 Thus article 5.1 serves as an important reminder that such testimony is generally admissible in international arbitration. 5.06 It should be further noted, however, that the general admissibility of such evidence does not affect the tribunal’s right to weigh and assign the appropriate value to expert testimony.2 The weighing of expert evidence is a matter left to the discretion of the tribunal, as is stated in article 9.1 of the IBA Rules.3 In this respect, arbitrators may adopt the findings of one party-appointed expert as opposed to another as they see fit.4 It has been further

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considered that it is not inappropriate for the tribunal to adopt an expert’s choice of terms and expressions in the final award, if the tribunal is persuaded that such terminology is useful to their determinations.5

Identifying the expert

5.07 Under article 5.1 the parties are required to identify any expert on whose testimony they intend to rely within the time frames set by the tribunal. In practice, such identification will often occur when the expert submits the first report in the case in accordance with the filing schedule set by the tribunal. However, under article 5.1 a tribunal is permitted to exclude testimony from an expert that is not identified in accordance with the established time frame.6 This may be particularly the case where a party reveals an expert witness just prior to the hearing. In such circumstances, a tribunal may, after considering the merits of the proposed testimony, rightly determine that to admit the testimony of an expert, only recently proffered, would cause the adverse party to suffer unfair surprise.

The expert report

5.08 Article 5.1 states that experts retained by parties are expected to provide a written report. The IBA Rules do not appear to contemplate testimony from an expert that is only provided orally. For many reasons this approach is advisable. As the expert report will often be quite complex and cover issues of a highly technical nature, both the tribunal and the opposing party should be provided with the report in advance so that they may consider its contents fully and prepare questions. 5.09 Similar to articles 3.1 and 4.1 of the IBA Rules in regard to documentary evidence and fact witnesses, the timing for the submission of the expert’s report is usually identified in the schedule set by the tribunal. The customary timing for the submission of an initial expert report intended to support a case-in-chief or defence-in-chief is with the filing of the statement of claim or defence, as is the case with the filing of documentary evidence and fact witness testimony.7 However, a tribunal may exercise its discretion to admit expert

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reports filed after the deadline where it considers it appropriate to do so,8 and equally, it may reject an expert report that is belatedly filed if the circumstances would warrant it.9

The contents of the expert report

Article 5.2 2010 IBA Rules: The Expert Report shall contain:
  • (a) the full name and address of the Party-Appointed Expert, a statement regarding his or her present and past relationship (if any) with any of the Parties, their legal advisors and the Arbitral Tribunal, and a description of his or her background, qualifications, training and experience;
  • (b) a description of the instructions pursuant to which he or she is providing his or her opinions and conclusions;
  • (c) a statement of his or her independence from the Parties, their legal advisors and the Arbitral Tribunal;
  • (d) a statement of the facts on which he or she is basing his or her expert opinions and conclusions;
  • (e) his or her expert opinions and conclusions, including a description of the methods, evidence and information used in arriving at the conclusions. Documents on which the Party-Appointed Expert relies that have not already been submitted shall be provided;
  • (f) if the Expert Report has been translated, a statement as to the language in which it was originally prepared, and the

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    language in which the Party-Appointed Expert anticipates giving testimony at the Evidentiary Hearing;
  • (g) an affirmation of his or her genuine belief in the opinions expressed in the Expert Report;
  • (h) the signature of the Party-Appointed Expert and its date and place; and
  • (i) if the Expert Report has been signed by more than one person, an attribution of the entirety or specific parts of the Expert Report to each author.

General discussion

5.10 Article 5.2 of the IBA Rules sets forth the general criteria according to which an expert report should conform. These standards may be followed as a means of ensuring that the information necessary for the tribunal to assess the validity and weight of the expert’s conclusions is included in the report, and to afford the adverse side, including its own experts, the fair opportunity to respond. In regard to the latter point, there is also a case to be made that the efficiency of the proceedings is enhanced when the parties adhere to the format set forth in article 5.2. This is so, because cross-examination of party-appointed experts may be conducted with greater efficiency if background information is included with the report in advance of the hearing as such disclosure may limit the need for foundational questions. 5.11 While some of the subparagraphs of article 5.2 are included for reasons that are self-evident, such as a requirement that the expert provide his or her full name under subparagraph (a), other requirements have from time to time given rise to controversy. Issues that have led to debate include, the duty incumbent on the expert to describe their instructions in subparagraph (b), the statement of independence set forth in subparagraph (c) (and the duty to disclose relevant relationships under 5.2(a)) as well as the duty to disclose the documents relied on in subparagraph (e). In regard to the subparagraph (b) and the requirement to disclose instructions, the question of whether the communications between a retained expert and legal counsel are covered by privilege may arise. Further, the required statement of independence set forth in subparagraph (c) may also be controversial insofar as it is often debated whether a party-appointed expert may be considered independent and, if so, to what extent does a perceived or real lack of independence impact upon the admissibility and weight to be given to a report. These and other issues are discussed more fully below.

The independence of a party-appointed expert

5.12 In regard to the independence of party-appointed experts, it is instructive to compare the requirements set forth in article 6 of the IBA Rules concerning tribunal-appointed experts and those pertaining to the party-appointed expert in article 5. Whereas article 6.1 pre-supposes that the tribunal-appointed expert will be independent, no such pre-requisite is noted in article 5.1. Instead, in article 5.2 a party-appointed expert is required to provide a “statement of independence from the Parties, their legal advisers and the Arbitral Tribunal” and to disclose details of relationships with any of the parties or legal advisers as per 5.2(a). This statement is to be included in the report itself, indicating that a determination that the party-appointed expert is sufficiently independent is not a pre-requisite for admitting the report into the record. Here too a contrast can be made

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to article 6.2, where the tribunal-appointed expert is required to disclose any details affecting his or her independence prior to being appointed, and before any testimony is to be admitted.10 5.13 The divergent approach to independence found in articles 5 and 6 derives from the different roles performed by the two types of expert. For the tribunal-appointed expert, a lack of independence may be grounds for terminating his or her appointment because independence is central to such expert’s duty to remain neutral mandate.11 Where the tribunal-appointed expert has a connection to a party or its advisers, that may be a cause of justifiable doubts concerning whether he or she is capable of acting for the tribunal. As a result, due process may require the tribunal to appoint a different expert. 5.14 Concerning the party-appointed expert, it is obvious from the outset that this expert is acting as per the instruction of a party.12 It is not unethical for counsel or a party to pay to the expert (reasonable) fees charged for his or her time.13 Therefore, it would appear inconsistent for a tribunal to consider the “independence” of an expert who is paid and instructed by a party, in a manner similar to a tribunal-appointed expert.14 The more workable interpretation of article 5.2(c) (and the disclosure requirements of 5.2(a)), would be to view

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these conditions as relevant to a tribunal’s weighing of the probative value of the expert report, and not as a matter of admissibility. Indeed this is an approach commonly adopted in international arbitration, as the comments of one well-experienced tribunal chairman, who possesses a civil law background, indicates:

[W]hen counsel in an arbitration starts to question the independence of experts, I always say there are no independent experts from the moment they are paid by the parties. That’s an objective point. From the moment you are paid by a party, objectively you are not independent. The problem is the reliability of your report.15

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