Production of documents in international arbitration

By Arthur Dong and Vicky Zhao, AnJie Law Firm

In international arbitration, production of documents is one of the biggest challenges for Chinese parties (for this article, “international arbitration” refers to international commercial arbitrations with seats of arbitration outside mainland China). The main reason is that China adopts a different set of rules of evidence from common law countries.

Q: What does “production of documents” mean with respect to international arbitration?

Arthur Dong
AnJie Law Firm

A: “Production of documents” generally means that a concerned party, as requested by the other party or upon the order of the arbitral tribunal, submits documents, or other materials that are in its possession or control and are relevant to dispute settlement, to the other party within the time ordered by the arbitral tribunal.

The party is required to make available the documents that are in its favour as well as those that are not. Production of documents is significant as it ensures that the parties concerned put all the facts before each other prior to the hearing, and helps the arbitral tribunal to make well-informed, objective and fair decisions.

Q: Is production of documents required in all international arbitration cases, and is there any applicable international guidance?

A: Production of documents is generally subject to the parties’ agreements and the arbitral tribunal’s discretion. The parties may agree on production of documents in an arbitration agreement or in the process of arbitration. For example, they may prohibit or restrict production of documents, or agree to produce the documents as per a certain set of rules of evidence. If the parties do not reach any agreement, the arbitral tribunal should rule on the production of documents. From the authors’ previous experience, production of documents is required in most international arbitration cases.

International Bar Association Rules on the Taking of Evidence in International Arbitration (IBA rules) are the rules of evidence frequently applied in international arbitration. The Prague rules, jointly drafted by representatives from about 30 countries, was officially released in December 2018, and has caught extensive attention in the field as it is closer to the rules of evidence adopted by civil law countries.

Q: How is the scope of documents to be produced determined, and what kinds of documents may be exempted?

Vicky Zhao
AnJie Law Firm

A: As per IBA rules, the documents requested should be “relevant to the case and material to its outcome”. In addition, the request to produce should describe the narrow and specific category of the documents, and the documents requested should be in the possession, custody or control of the party being requested to produce.

The party requested may raise objections to the request to produce on the following grounds: (1) the documents are not sufficiently relevant to the case or material to the outcome; (2) the documents are subject to legal privileges (e.g., attorney-client privilege, or without prejudice privilege); (3) production of documents would be unreasonably burdensome; and (4) the documents are lost or destroyed. The arbitral tribunal will decide whether the objection is justifiable.

The arbitral tribunal may not necessarily rule exemption of documents containing business secrets, but would generally approve adoption of protection measures if it rules to produce.

Q: When and how will the documents be produced?

A: When the arbitration proceedings are initiated, the parties concerned generally exchange written opinions and evidence in their own favour. Then production of documents is requested.

In international arbitration, the Redfern Schedule is widely adopted to push forward the production procedures. The schedule, named after a British arbitrator, contains serial numbers, description or types of the documents requested, statements as to how the documents are relevant to the case and material to the outcome, grounds for objections, reply of the requesting party to the objections, and decisions of the arbitral tribunal. The parties should fill in the above-mentioned items, except for the last one. Through the parties’ exchange and expression of their opinions, the arbitral tribunal may efficiently decide whether to approve the request to produce or not.

Q: What are the consequences if the documents requested are not produced?

A: An international arbitration case would involve a large amount of evidentiary materials, which are interlinked. Factual witnesses may also be identified to give testimonies. For these reasons, it is difficult for the party possessing material evidence to withhold the fact of its possession of such evidence. Once the arbitral tribunal finds that any party concerned attempts to intentionally withhold and/or destroy adverse evidence against it, or to mislead the arbitral tribunal, such party may lose the case and face more adverse consequences. For these reasons, the authors advise the parties to give reasonable interpretation of the evidence and materials that are not in its favour, rather than object to production.

If a party refuses to produce the documents ordered by the arbitral tribunal, first the arbitral tribunal may make adverse inferences against it. For example, the arbitral tribunal may infer that the documents not produced contain adverse content against the party requested to produce, and even that such documents support the requesting party’s claims; second, the arbitral tribunal may rule that the party objecting to production assumes more arbitration costs.

Q: What are the major problems that Chinese parties face when they are requested to produce documents, and how should Chinese enterprises improve their internal management to better respond to requests for production of documents?

A: Chinese parties may instinctively object to the request to produce, and tend to refuse to produce adverse information against themselves, as they are not familiar with the production of documents in international arbitration. For many of them, the arbitral tribunal has made adverse inferences against them because their failure to produce had not been well grounded. In addition, the common problem of a lack of sound document management and archiving system for Chinese parties even makes it impossible for them to produce evidence and materials in their own favour.

For these reasons, Chinese enterprises should pay more attention to document management and establish reliable document archiving systems. Enterprises facing high risks of cross-border disputes should also engage a lawyer for training to learn more about the problems that frequently confront Chinese enterprises in cross-border legal proceedings, and solutions to protect themselves.

Arthur Dong and Vicky Zhao are partners at AnJie Law Firm

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