Evidence in Investor-State Arbitration

The term “evidence” (noun) dates back to c. 1300, "appearance from which inferences may be drawn", from Old French evidence, from Late Latin evidentia "proof", in classical Latin "distinction, vivid presentation, clearness". As a verb, it means to show clearly, prove, give evidence of, c. 1600, from “evidence” (n.).¹ 

Evidence serves as the means of proof. Thus, it can be distinguished from the allocation of the Burden of Proof and from the Standard of Proof (i.e., the required degree of proof).

Arbitral tribunals are granted and exercise discretion in relation to evidentiary matters. These discretionary powers can be found in the Lex Arbitri, in the Arbitration Rules, or in the applicable Treaty.

Pursuant to the ICSID Convention (Article 44), “[a]ny arbitration proceeding shall be conducted in accordance with the provisions of [Section 3 (Powers and Functions of the Tribunal, Articles 41-47) of Chapter IV (Arbitration)] and, except as the Parties otherwise agree, in accordance with the Arbitration Rules. […] If any question of procedure arises which is not covered by this Section or the Arbitration Rules or any rules agreed by the Parties, the Tribunal shall decide the question.”²

Article 43 provides that, “[e]xcept as the Parties otherwise agree, the Tribunal may, if it deems it necessary at any stage of the proceedings, (a) call upon the Parties to produce documents or other evidence, and (b) visit the scene connected with the dispute, and conduct such inquiries there as it may deem appropriate.”³

The Rompetrol award notes that the intention behind Articles 43-45 of the ICSID Convention is “plainly that a tribunal should possess a large measure of discretion over how the relevant facts are to be found and to be proved”. And that this “general principle […] finds strong reinforcement in the Arbitration Rules, notably in paragraphs (1) and (3) of Rule 34.”⁴

Indeed, ICSID Arbitration Rule 34(1) of 2006 provides as follows: “The Tribunal shall be the judge of the admissibility of any evidence adduced and of its probative value.”⁵

Moreover, the Gavrilovic tribunal considers that, “[i]n the absence of mandatory rules as to how a tribunal should judge the probative value of evidence, […] it [is] appropriate to apply the general approach taken in international dispute settlement which is not characterised by formal rules of evidence.”⁶

With regard to the International Chamber of Commerce Rules, Article 25 is dedicated to establishing the facts of the case.

For its part, Article 19 of the UNCITRAL Model Law (and Article 27 of the UNCITRAL Arbitration Rules 2013)⁷ provides that the power conferred upon the arbitral tribunal includes the power to determine the “admissibility, relevance, materiality and weight of any evidence.”⁸

The same provision is found in Article 31 of the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC Rules 2017),⁹ and in the IBA Rules of Evidence (Article 9), addressed below.¹⁰

The International Bar Association Rules on the Taking of Evidence in International Arbitration (IBA Rules of Evidence)¹¹ enjoy wide acceptance within the investor-State arbitral community. Indeed, it is commonplace that Procedural Order No. 1 (PO1) of any treaty arbitration incorporates an explicit reference to the IBA Rules of Evidence, often as a guideline for the tribunal.¹²

The IBA Rules constitute a significant effort in harmonising the civil law and common law approach. They are intended to provide an “efficient, economical and fair process for the taking of evidence”, and “designed to supplement the legal provisions and the institutional, ad hoc or other rules that apply to the conduct of the arbitration."¹³

“Whenever the Parties have agreed or the Arbitral Tribunal has determined to apply [them], the [IBA] Rules shall govern the taking of evidence, except to the extent that any specific provision of them may be found to be in conflict with any mandatory provision of law determined to be applicable to the case.”¹⁴

They provide that the “taking of evidence shall be conducted on the principles that each Party shall act in good faith and be entitled to know, reasonably in advance of any Evidentiary Hearing or any fact or merits determination, the evidence on which the other Parties rely.”¹⁵

Some of the issues addressed by the IBA Rules of Evidence include:

Document Production (Article 3), the mandatory content of the Request to Produce (3.3), the reasons for objections to Documents requested (3.5, re 3.3 and 9.2), and confidentiality (3.13).

A commonly accepted tool for organizing document requests, objections, and decisions, is the Redfern Schedule (table with at least four columns). Regarding document production, it is also worthwhile to highlight as well the Armesto Schedule,¹⁶ a collaborative table inspired by the classic Redfern Schedule.

Witnesses of Fact (Article 4), including any person, including a Party or a Party’s officer, employee or other representative (4.2), the content of his or her Statement (4.5), and the consequences of failure to appear for testimony at an Evidentiary Hearing (4.7).

Party-Appointed Experts (Article 5), the mandatory content of the Expert Report (5.2, including “a statement regarding his or her present and past relationship with any of the Parties, their legal advisors and the Arbitral Tribunal, and a description of his or her background, qualifications, training and experience” (5.2.a); “a description of the instructions” received (5.2.b); “a statement of his or her independence” (5.2.c); “an affirmation of his or her genuine belief in the opinions expressed in the Expert Report” (5.2.g); and, “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” (5.2.i), Expert’s conference (5.4), and the consequences of failure to appear for testimony at an Evidentiary Hearing (5.5).

Tribunal-Appointed Experts (Article 6), specifications to be considered.

The possibility of Inspection (Article 7) of “any site, property, machinery or any other goods, samples, systems, processes or Documents, as [the Arbitral Tribunal] deems appropriate”.

The Evidentiary Hearing (Article 8) and the order of proceeding. At the request of a Party or on its own motion, the Arbitral Tribunal may order that the Evidentiary Hearing be conducted as a Remote Hearing.¹⁷ In that event, the Arbitral Tribunal shall consult with the Parties with a view to establishing a Remote Hearing protocol. The protocol may address:

1. the technology to be used;
2. advance testing of the technology;
3. the starting and ending times;
4. how Documents may be placed before a witness or the Arbitral Tribunal; and
5. measures to ensure that witnesses giving oral testimony are not improperly influenced or distracted.

The Admissibility and Assessment of Evidence by the Arbitral Tribunal (Article 9), including:

1. the Reasons to Exclude from evidence or production “any Document, statement, oral testimony or inspection” (9.2, e.g., “lack of sufficient relevance to the case or materiality to its outcome” (9.2.a), “legal impediment or privilege” (9.2.b), “unreasonable burden” (9.2.c), “loss or destruction” (9.2.d), “confidentiality” (9.2.e), “special political or institutional sensitivity” (9.2.f), “procedural economy”, “proportionality”, “fairness or equality” (9.2.g)); and the power, at the request of a Party or on its own motion, to exclude evidence obtained illegally (9.3).
2. Adverse Inferences (9.7): “If a Party fails without satisfactory explanation to make available any other relevant evidence 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 […] 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.”¹⁸
3. Lack of good faith (9.8): “If the Arbitral Tribunal determines that a Party has failed to conduct itself in good faith in the taking of evidence, the Arbitral Tribunal may, in addition to any other measures available under these Rules, take such failure into account in its assignment of the Costs of the Arbitration, including costs arising out of or in connection with the taking of evidence.”