Litigation and Alternative Dispute Resolution

Prof. Dr. H. Ercument Erdem

Document production requests in international arbitration play an important role, since they ensure that the parties have access to documents that are not in their possession, in order to provide sufficient proof for their claims. In parallel with this important role, document production requests are closely related to the parties’ right to due process, since the documentation of an issue may totally depend on a document production request.

An unsuccessful document production request may give rise to claims of infringement of the right to due process, and may even lead to requests to set-aside, or grounds for non-recognition or non-enforcement of the arbitral award, which makes it an important concern for parties, as well as arbitrators. The link between document production requests and concerns of right to due process shall be analyzed in this article.

In General

In international arbitration, document production requests are usually conducted pursuant to IBA Rules on the Taking of Evidence in International Arbitration (“IBA Rules” or “Rules”). In the foreword of the Rules, it is emphasized that the Rules aim to provide a resource to parties and arbitrators to ensure an efficient, economical and fair process for the taking of evidence in international arbitration.[1] Accordingly, fair process is a major subject in the IBA Rules.

The IBA Rules provide basic requirements to request production of documents: The requested documents should be specific (Art. 3/3(a) of the Rules), they should be relevant to the case and material to its outcome (Art. 3/3(b) of the Rules), and they should not be in the possession, custody or control of the requesting party, nor be unreasonably burdensome for the requesting party to produce such documents (Art. 3/3(c) of the Rules). Accordingly, the IBA Rules draw some guidelines for document production, and their focus is rather on limited document production, in line with these requirements.

Objections to Document Production and Due Process Concerns

Art. 9 of the IBA Rules provide specific provisions for the admissibility and assessment of evidence. Accordingly, the main principle is that the arbitral tribunal shall determine the admissibility, relevance, materiality and weight of evidence. If the tribunal is convinced that the reasons set forth under Art. 9/2 exist, it may rule on the exclusion of the relevant document. The document production requests may either be challenged by the counterparty, or the arbitral tribunal may decide to exclude the document through its own motion. Accordingly, if the requested documents fall within one of these categories, the document production request will be unsuccessful.

Even though the grounds for objection will not be examined in detail in this article,[2] in practice, the arbitral tribunals are compelled by following reasons: legal impediment of privilege, unreasonable burden to produce the requested document, and grounds of commercial or technical confidentiality. Accordingly, the IBA Rules aim to balance the interests of the parties, and even though there are some documents that may fall within the scope of the IBA Rules, they may be excluded from evidence based on these concerns.

As an example, the following scenario may be contemplated: The parties to an arbitration case have disputes based on a shareholders’ agreement. During the document production request phase, the respondent requests from the claimant a report prepared by a third party, upon the instructions of the claimant. The report gives some details about the valuation of the shares; therefore, it is relevant to the case and material to its outcome. The claimant objects to this request, with the argument that the report contains commercially confidential information. When the arbitral tribunal has to rule on this objection, it orders that the report should be submitted; however, subject to some limitations, such as limitations as per the audience to whom the report should be submitted, and exclusion and editing of some parts of the report that may contain commercially confidential information. Later on, the arbitral tribunal takes this report into consideration in the calculation of damages.

This limited submission may later give rise to allegations that the respondent could not be informed about a report that was quite consequential to the case and, accordingly, to the allegation that the right to due process was infringed upon, especially if the respondent is the losing party.

Limited Document Production and Enforcement Proceedings

In the event that the objections to document production are successful, the arbitral tribunal will order a limited document production, or the request will be denied in its entirety. Even though the IBA Rules, as explained above, permit this limited document production, this limitation may give rise to some challenges during set-aside and enforcement proceedings. Accordingly, the party whose document production request has not been granted may bring this forward during set-aside or enforcement proceedings[3].

As far as the enforcement proceedings are concerned, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (“New York Convention”) is applied worldwide, with 157 contracting states.[4] As a very successful international instrument, it is quite probable that the enforcement of an arbitral award would be conducted pursuant to the New York Convention.

Under the New York Convention, the grounds for refusal of recognition and enforcement are set forth under Art. 5. The grounds that may give rise to enforcement concerns based on a limited document production may vary depending on the specifics of each case; however, amongst these grounds, two of them stand as the usual suspects: Art. 5/1(b), which sets forth that the party against whom the award is invoked was unable to present his case may challenge enforcement, and Art. 5/2(b), pertaining to contrariety to the public policy of the country in which enforcement is sought.

When it comes to public policy concerns, public policy is interpreted as “international public policy,” and it is not accepted that challenges to an arbitral award would be successful if the award fails to conform simply to a domestic law requirement. Accordingly, this concept is confined to the violation of truly fundamental concepts of the legal order of the country concerned.[5] In line with this requirement, it would be safe to say that the right to due process would be considered within the scope of international public policy.

As per set-aside proceedings, most national laws provide that arbitral awards may be subject to set-aside proceedings at the arbitral seat. It should be noted that a limited document production might give rise to set-aside proceedings, as well. The set-aside regime depends on the legislation of the seat of arbitration. As far as Turkish law is concerned, the grounds to set-aside are set forth under International Arbitration Law numbered 4686. It should be emphasized that the reasons to set-aside are similar to the grounds giving rise to refusal of recognition and enforcement of an arbitral award under the New York Convention. Therefore, our explanations, above, concerning the New York Convention are applicable for set-aside proceedings to be initiated in Turkey. As a general remark, it may be concluded that most states restrict the set-aside challenges to excess of jurisdiction and lack of due process, which reflect the policies behind those grounds[6].

Conclusion

Limitations on document production requests aim to find the right balance between the parties’ rights and various concerns. Having this in mind, the IBA Rules set forth the grounds for objection to document production requests, which may lead to the limited production of a document, or to non-production. These limitations may be challenged during set-aside or enforcement proceedings, by a party who could not obtain the desired result in its arbitration proceedings, and may cause that the arbitral award is rendered useless for the winning party. These challenges should be carefully reviewed and analyzed by the courts, in order not to permit abuse of the right to due process.