No Reason to Fear Discovery in International Arbitration Seated in the United States

The potential for prolonged, overly burdensome and expensive discovery in both domestic and international arbitration seated in the United States has been a major concern among commercial entities and their counsel for many years. International parties often ask the following questions: Why should they accept lesser evidentiary standards in an arbitration and give up the right to appeal if they will potentially spend as much money, time and resources as one would in court? Why, as foreign firms accustomed to litigation with little or no discovery, would they voluntarily submit to an American arbitral tribunal, particularly one that may feature retired American judges, who are accustomed to ordering seemingly endless discovery in the form of voluminous document production, expensive e-discovery and a multitude of depositions?

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These are legitimate questions that demand the attention of arbitrators, arbitrating counsel and arbitration providers. The answers to these questions are, however, probably more nuanced than the questions may suggest. Most American arbitrators, including retired American judges, adhere to the fundamental principles that arbitration is a creature of contract and that parties are thus free to chart their own course including how little or how much discovery should be allowed in their arbitration. A more experienced arbitrator, well aware of these principles, will often attempt to guide the arbitral process as efficiently as possible, even if the parties are seeking and have agreed to broad discovery.

Attorneys in civil law jurisdictions expect little to no discovery in their disputes. The common law discovery process, on the other hand, depending on the scope of the evidence, can be time-consuming and expensive. Many civil law attorneys consider traditional common law discovery to be overly burdensome and intrusive, while common law lawyers often consider broad discovery to be an absolute necessity in order to achieve complete transparency and to maximize the possibility of success in the underlying case.

One preventive measure that can be taken to impede an overly extensive disclosure process is to properly draft an arbitration clause that includes provisions limiting discovery. Article 19 of the United Nations Commission on International Trade Law, Model Law on International Commercial Arbitration (UNCITRAL Model Law), provides parties with wide discretion to develop the procedures of an arbitral proceeding. The UNCITRAL Model Law thus make it clear that if an arbitration agreement fails to specify the procedures to be followed, then the arbitral tribunal will decide them for the parties. Therefore, clearly setting forth in your arbitration agreement what is considered acceptable and unacceptable discovery is key.

Not only does the contract between the parties play a pivotal role in how the proceedings will handle the exchange of information, but choosing the right administrative body, or administrative rules in an ad hoc proceeding, and knowing the applicable rules that will govern your arbitration is vital in preventing excessive and costly discovery. For example, the JAMS Efficiency Guidelines for the Pre-Hearing Phase of International Arbitrations (JAMS Guidelines) assures that JAMS “has always conducted United States-based arbitrations in accordance with internationally accepted standards and practices.” These guidelines can help neutrals take control of the pre-hearing proceedings and can help parties feel confident that a sole arbitrator or a tribunal will conduct an arbitration in accordance with internationally accepted standards. Guidelines such as these can be the difference between a long and burdensome proceeding and a swift and effective one. These guidelines suggest that a neutral should employ an adaptive approach whether a case emanates from a common law or a civil law jurisdiction.

Moreover, the JAMS Guidelines also make clear that although parties can chart their own course, more limited discovery is preferred and “where one side wants broad Pre-Hearing Disclosure and the other wants narrow pre-hearing disclosure, the arbitrator will set meaningful limitations.” Finally, the JAMS Guidelines acknowledge that written witness statements are perfectly acceptable in international arbitrations in lieu of direct testimony.

Short of denying fundamental fairness, it is clear that there is no legal standard or protocol that compels American arbitrators to allow full-blown, wide-open discovery in an international arbitration. There is no common law or statutory requirement that requires this result. In point of fact and quite to the contrary, American arbitrators have the discretion and the support of at least some arbitral forums and their rules to guide, if not actually to direct, parties to a more efficient and less expensive discovery process that provides due process and an accelerated path to an award that is both fair and expeditious. 

Although parties and counsel may naturally be apprehensive about engaging in an arbitration with an American arbitral tribunal that is steeped in common law tradition and that potentially has a much broader view of discovery, there is nothing to fear. American arbitrators, lawyers and retired judges alike, are well aware of the guidelines and rules of the major international arbitral forums, which respect the more limited discovery expectations of civil law practitioners and, at the same time, empower arbitrators to structure discovery processes to accommodate the demands of particular parties and their individual disputes.

Hon. Ariel E. Belen (Ret.) serves as a JAMS arbitrator, mediator and special master in complex domestic and international disputes spanning a wide array of practice areas. He can be reached at abelen@jamsadr.com.