While burden of proof deals with the responsibility of a party to establish a proposition, it does not indicate the level (or standard) of proof that is required. Standard of proof deals with (a) the degree of conviction that the adjudicator must have to be satisfied that that the burden has been met,1 and (b) the sufficiency of evidence relied upon by a party to establish facts germane to its case.2
II. General practice
The practice in international arbitration is to assess the weight to be given to the evidence presented in favour of any particular proposition by reference to the nature of the proposition to be proved.3 Institutional arbitration rules often do not specify the standard of proof to be adopted4 and the tribunal is the judge of the probative value of any evidence.5 Generally, the standard of proof applied in international arbitration is that a claim must be proven on the ‘balance of probabilities’.6
Continental Casualty Company v. Argentine Republic, ICSID Case No.ARB/03/9, Decision on the Application for Partial Annulment, and the Application for Partial Annulment, 16 September 2011, para 135; Churchill Mining and Planet Mining Pty Ltd v. Republic of Indonesia, ICSID Case No. ARB/12/40 and 12/14, Decision on Annulment, 18 March 2019, para. 214; Georg Gavrilovic and Gavrilovic d.o.o. v. Republic of Croatia, ICSID Case No. ARB/12/39, Award, 26 July 2018, para. 229.
Bernhard von Pezold and others v. Republic of Zimbabwe, ICSID Case No. ARB/10/15, Award, 28 July 2015, para. 177; PNG Sustainable Development Program Ltd. v. Independent State of Papua New Guinea, ICSID Case No. ARB/13/33, Award, 5 May 2015, para. 255; Khan Resources Inc., Khan Resources B.V. and Cauc Holding Company Ltd. v. the Government of Mongolia and Monatom Co., Ltd., PCA Case No. 2011-09, Award, 2 March 2015, para. 375.
III. Specific propositions
A. Fraud, Corruption and Bad Faith
When it comes to proving bad faith or illegalities (such as corruption, forgery, fraud, etc.), there is no uniformity. Some tribunals have found that these allegations require a “high standard of proof”8 and “clear and convincing” evidence.9 A recent award also highlighted that the standard is “higher than the balance of probabilities but less than the criminal standard of beyond reasonable doubt”.10 Other tribunals held that the standard remains the “balance of probabilities”,11 and even allowed the consideration of circumstantial evidence.12
Ioan Micula, Viorel Micula and others v. Romania (II), ICSID Case No. ARB/14/29, Award, 5 March 2020, para. 378; Oded Besserglik v. Republic of Mozambique, ICSID Case No. ARB(AF)/14/2, Award, 28 October 2019, para. 362; South American Silver Limited (Bermuda) v. The Plurinational State of Bolivia, PCA Case No. 2013-15, Award, 30 August 2018, para. 673; UAB E energija (Lithuania) v. Republic of Latvia, ICSID Case No. ARB/12/33, Award of the Tribunal, 22 December 2017, para. 541.
Tethyan Copper Company Pty Limited v. Islamic Republic of Pakistan, ICSID Case No. ARB/12/1, Decision on the Respondent’s Application to Dismiss the Claims (with reasons), 10 November 2017, para. 307; Unión Fenosa Gas, S.A. v. Arab Republic of Egypt, ICSID Case No. ARB/14/4, Award, 31 August 2018, para. 7.52.
B. Denial of Justice
While some tribunals found that to establish denial of justice, the standard of proof is “balance of probabilities”,13 others considered that it is rather “high” and there must be “clear evidence of an outrageous failure of the judicial system” or a demonstration of “systemic injustice” or that “the impugned decision was clearly improper and discreditable.”14 The latter view is based on the following reasoning: one must prove lack of procedural fairness in local court proceedings resulting in such an egregiously wrong decision that no honest or competent court possibly have given.15
Reinhard Hans Unglaube v. Republic of Costa Rica, ICSID Case No. ARB/09/20, Award, 16 May 2012, para. 273; Philip Morris Brand Sàrl (Switzerland), Philip Morris Products S.A. (Switzerland) and Abal Hermanos S.A. (Uruguay) v. Oriental Republic of Uruguay, ICSID Case No. ARB/10/7, Award, 8 July 2016, para. 499.
C. Valuation of damages
The standard of proof does not require a “scientifically precise” valuation – rather, the tribunal must be convinced that the proposed valuation will produce a sufficiently reliable result.16 As the exercise of valuation involves a degree of estimation, a claimant only needs to provide a basis upon which a tribunal can, with reasonable confidence, estimate the extent of the loss.17
Lemire v. Ukraine (II), ICSID Case No. ARB/06/18, Award, 28 March 2011, para. 246; Gold Reserve v. Venezuela, ICSID Case No. ARB(AF)/09/1, Award, 22 September 2014, para. 686; Crystallex International Corporation v. Bolivarian Republic of Venezuela, ICSID Case No. ARB(AF)/11/2, Award, 4 April 2016, paras. 865-869.
D. Disqualification of Arbitrator
The standard of proof required under the ICSID Convention is that the challenging party must prove that the lack of independence is “manifest” or highly probable, not just possible.18 It is an “objective standard based on a reasonable evaluation of the evidence by a third party”.19 Instead of proving actual dependence or bias; it is sufficient to establish the appearance of dependence or bias.20 (See Arbitrator Impartiality and Independence).
Frank Schumm, Joachim Kruck, Jürgen Reiss and others v. Kingdom of Spain, ICSID Case No. ARB/15/23, Decision on the Proposal to Disqualify Mr. Gary B. Born, 16 March 2018, para. 50; Blue Bank v. Venezuela, ICSID Case No. ARB/12/20, Decision on the Parties’ Proposals to Disqualify a Majority of the Tribunal, 12 November 2013, para. 59.