[Muskan Arora is a III year B.A. LL.B (Hons.) student at the West Bengal National University of Juridical Sciences, Kolkata]
In the first part of this post, I critique the presence of an undefined good faith standard in imposing sanctions upon the parties in the International Bar Association Rules on the Taking of Evidence (‘IBA Rules’) pursuant to article 9(7) and how the same is particularly problematic in the Indian arbitration regime. As was noted, arbitral authority cannot be boundlessly augmented as a consequence of uncertainty and lack of meaning. In this part, I shall be addressing other very particular procedural aspects of the IBA Rules, which are not apt for the Indian arbitration regime.
Expert opinion under the IBA Rules
Pursuant to article 5 of the IBA Rules, a party may rely on a party appointed expert as a means of evidence. Further, under article 6, the arbitral tribunal has the freedom of appointing independent experts on its own volition to comment on specific issues. There is no clarity on which report the tribunal is to rely on in case the opinion of the party appointed expert is conflicting with that of the tribunal-appointed expert. In addition, the rules also do not provide any mechanism of pitting the opinion of an expert against a non-expert. A small but practical example highlighting the significance of the opinion of a non-expert is of handwriting evidence. It is possible for an individual acquainted with the handwriting of the writer to identify the same. In the Indian legal framework, the same is permissible under section 45 of the Indian Evidence Act. The Indian Evidence Act is also silent in formulating a hierarchy between the opinion of a non-expert and that of an expert. On a separate note, though, a hierarchy is created as pursuant to section 73 of the Evidence Act, and the court has the paramount discretion in deciding the conclusiveness of the opinion of the expert.
Section 19 of the Arbitration and Conciliation Act, 1996 (‘Arbitration Act’) makes it clear that the Evidence Act will not apply to arbitration proceedings, and the same is for the right reason. The application of judicial resources and national legislative policies by a judge in litigation is in stark contrast to arbitration, which is essentially resolution of specific disputes in agreement with a framework privately determined by the parties’ will. Surprisingly, like section 73 of the Evidence Act, article 6.7 of the IBA Rules anyways makes clear that it is the arbitral tribunal that is to determine the conclusiveness of the expert’s opinion. This provision is disconcerting both from theoretical and practical perspectives. Theoretically, it bestows upon the tribunal an additional power of assessing the weight of the expert opinion in light of the circumstances of the case at the cost of inversely diminishing the principle of party autonomy.
The same raises practical concerns too, especially in the Indian context. To dilute the effect of imposing too much power in the hands of the arbitral tribunal, the IBA Rules introduced a mechanism wherein the parties have the option of objecting to the appointment of a tribunal appointed expert if they have concerns pertaining to his qualifications or independence. This the parties must do within the time limit stipulated by the parties. However, on the discovery of a new fact, the appointment of an expert can be challenged even after the time limit.
In India, the biggest challenge faced in arbitration is that it does not always result in speedier resolution of disputes as parties often find a way or another to stymie the arbitration process. The absence of a known standard or operative criterion on which the parties may seek to challenge the appointment of an expert may frustrate any aspiration the parties may have to resolve the dispute quickly simply due to lengthy procedures, which by the way can also be used by one of the parties looking to buying some extra time at the prejudice of the other party resulting in frivolous claims.
Document production under the IBA Rules
A significant characteristic of the IBA Rules is its provisions on document production. The IBA Rules tend to limit the extent of documents that can be produced before the arbitral tribunal at various junctures throughout the rules. Under article 3(3) of the IBA Rules, it is stipulated that the parties may request the production of only “narrow and specific” categories of documents. Furthermore, under article 3(1), parties are required to produce documents, “within the time ordered by the arbitral tribunal.” This phrase is repeated throughout the IBA Rules when a submission is to be made or an action to be taken by the parties. Such a provision affords an inquisitorial role upon the tribunal. Even the use of the word “order” is surprising.
Further, the time limit ordained by the tribunal (presumably in consultation with the parties), unreasonably limits the parties. It is only practical to assume that parties may rely on different materials at varying points in time as issues arise. Though under article 3(11) of the IBA Rules a second round of production of evidence is allowed, but a time limit also binds the same. Not just that, pursuant to article 3(10), the arbitral tribunal is authorized to take “any step it considers appropriate to obtain Documents from any person or organization.”
Over the years, one of the main tools for trial procedure in India is document production or discovery. The same is used to aid the parties in ascertaining the truth and disclosing facts that would not be provable otherwise. More often than not, Indian parties rely on such discovery to better assess the actual value of their claims, thereby expediting the preparation of such claims. In a scenario where parties have always been so dependent on document production, limiting the same at the discretion of the tribunal will repel the parties from choosing to arbitrate their claims. They would rather choose litigation as a platform where they are free to present any and all documents (barring documents deemed to be confidential or part of a privileged communication). Ironically, in India, the result of such a restriction would mean that parties have more autonomy in litigation as against arbitration.
Further, parties in India often choose arbitration over litigation, given the organic and flexible nature of the arbitration process. Restricting parties from presenting evidence that deals with newly presented claims or other evidentiary concerns that arise through the course of the proceeding is an unreasonable limitation and may dissuade parties from opting arbitration.
Witness testimony under the IBA Rules
Just like the production of documents, pursuant to article 4 of the IBA Rules, the tribunal has complete authority to impose the time within which the information pertaining to witness statement must be provided. In fact, the UNCITRAL Arbitration Rules, on the basis of which the Indian arbitration model is framed, merely requires that information pertaining to the testimony be provided at least some time before the hearing.
The unbridled power of the tribunal does not end here. Under article 9.2(c) of the IBA Rules, the arbitral tribunal has the authority to “exclude from evidence or production any Document, statement, oral testimony or inspection” that would be an unreasonable burden to produce. The nature or form of what is meant by this unreasonable burden is purposely left to the discretion of the arbitral tribunal.
Another striking feature of the IBA Rules is that, pursuant to article 8.1, the arbitral tribunal may request the presence of a specific witness even if neither party demands that witness’ appearance. Generally also, under article 4.10, the arbitral tribunal may instruct any party to provide for, or to use its best efforts to provide for, any documents or testimony of any witness it deems fit.
Contrariwise, in India, the arbitrators do not have the power to force unwilling witnesses to appear before the tribunal. Pursuant to section 27 of the Arbitration Act, the tribunal, however, may take the assistance of the court in procuring evidence in case of reluctant witnesses, but the tribunal per se does not possess this discretion. The decision of who to call as witnesses must be the responsibility of the parties. They must be given the freedom to determine the issues on which they deem appropriate to seek the testimony of a witness. Vesting the arbitral tribunal with such powers engrafts upon the arbitral tribunal a discretion that, in certain cases is even broader than what is offered to a judge in litigation.
Appropriately contextualized, in light of the fact that arbitration is still not entirely accepted as a method of dispute resolution in India and litigation is in fact deeply rooted given the heavy and undefined procedural requirements, bestowing upon the arbitral tribunal unbridled authority under the IBA Rules may dissuade parties from opting for arbitration to resolve their disputes. Therefore, it is argued that, presently, the Indian arbitration framework is not suited for the IBA Rules and the adoption of the same may lead to more problems than it resolves.
– Muskan Arora