How International Commercial Arbitration Can Be More Efficient, Speedier, and Less Costly

International commercial arbitration is often and accurately criticized for being too slow and expensive.[1] However, delays and exorbitant costs in these cases are not inevitable; they are the result of intentional but frequently mistaken choices by the parties.

Flexibility is one of the key benefits of international arbitration.[2] The parties can, within applicable mandatory laws, structure the arbitral process by amending procedural rules and tailoring procedures to the needs of the dispute, while achieving an efficient, speedier and cheaper resolution.

Three causes of excessive costs in arbitration deserve attention: the unnecessary length of the parties’ submissions, overbroad discovery of documents, and the ineffective and abusive selection, preparation and examination of fact witnesses. It is possible to reduce the costs of these activities without harming the quality or fairness of the proceedings. Indeed, they are often disproportionate to the anticipated benefits.

Submissions could concentrate on real issues

Many parties file lengthy briefs covering every potential aspect of the case. Their submissions would be more effective if limited to significant issues only. The briefing process could be improved if the arbitral tribunal could, after having studied the first round of briefs and with the permission of the parties, define the issues the tribunal regards as relevant to the case and material to its outcome. Such a practice is encouraged by Article 2, paragraph 3 of the 2020 IBA Rules on Taking Evidence in International Commercial Arbitration (IBA Rules).[3] Thereafter, without limiting their right to argue other issues, the parties could concentrate their briefs on topics of interest to the tribunal.

Overbroad document discovery requests are seldom worth their high cost

Article 3 of the IBA Rules allow the parties to submit a request to produce documents to the arbitral tribunal and to each other. Paragraph 3 of Article 3 requires the requests to specifically identify the desired documents or a narrow category of documents and explain why these documents are relevant to the case and material to its outcome. However, too often parties deliberately submit discovery requests for broadly described categories of documents. Thereafter, each party will object that the requests are neither specific enough nor relevant to the dispute. Then, the arbitral tribunal will either permit or deny the contested requests, as it is not the tribunal’s role to cure the parties’ drafting errors. As a result, the parties will not obtain the requested documents; instead, they spend a lot of time—and money—arguing without benefit.

Therefore, document discovery should be targeted or not used at all. Most parties do not find a smoking gun that tilts the case in their favor, despite spending time and money arguing. From a civil law perspective, justice can be rendered without a discovery of documents procedure. The parties in international commercial arbitration can choose to pursue an ineffective discovery of documents procedure, but then they should not complain that arbitration is expensive.

Fact witnesses in arbitration often do not influence the decision

Fact witnesses in international commercial arbitration can be valuable if they have uncontaminated, direct knowledge of the relevant facts or can explain gaps in documents. A witness should give his or her own evidence uninfluenced by what anyone else has said. The parties are free to identify the witnesses on whose testimony they intend to rely. However, increasingly, the present form of preparing and presenting witness testimony in international commercial arbitration adopts the Anglo-U.S. litigation model. Many practitioners question whether this model of presenting witnesses really helps the arbitral tribunal find the truth.

For example, Toby Landau, KC, opines that this practice of selecting, preparing and presenting witness testimony may corrupt the very evidence that arbitral tribunals rely upon for the fair resolution of disputes.[4] The practice is also expensive, as a lot of time and money is spent—and possibly wasted—in the selection, preparation, presentation and cross-examination of fact witnesses. Often the selection of a given witness does not allow the arbitral tribunal to find the “truth” if that witness does not possess the best personal knowledge. Instead, the selection of witnesses can be a highly strategic exercise aimed at finding those who are best able to present and express themselves, give a favorable impression, support the case and withstand cross-examination. Additionally, written witness statements have little to do with the actual words and recollections of witnesses and rarely contain their actual, unassisted recollections.

This practice raises the question of whether preparation of the witness statements and rehearsals in preparation for the cross-examination constitute legitimate witness familiarization or distortion of the witness’s memory. The International Chamber of Commerce (ICC) Task Force on Maximizing the Probative Value of Witness Evidence[5] concluded that the memory of an honest witness can easily become distorted by the interactions that commonly take place in the preparation and presentation of witness evidence and may therefore be less reliable. Thus, the testimony of a witness whose memory was refreshed or even trained in mock cross-examinations may not be the uncontaminated memory of that witness.

An arbitral tribunal may not know which testified facts correspond to the original memory of a witness and how much was learned and memorized by the witness during the witness preparation. Even worse for the offering party, the tribunal may recognize when witnesses don’t have direct personal knowledge and discount their testimony accordingly. Thus, the time and effort devoted to proffering that evidence may be wasted, as the tribunal makes its decision based on other proof.

Parties have the option to make an arbitration quicker and less expensive

Unnecessary briefing, unproductive efforts to discover documents and the improper selection and presentation of fact witnesses are unlikely to significantly influence the decision of an arbitral tribunal in favor of the offending parties. Concentrating on the material issues in dispute, avoiding or limiting discovery of documents requests and eliminating fact witnesses with little or no personal knowledge can speed up the arbitral process and significantly reduce costs. Ultimately, it is within parties’ power to save time and money without damaging their cases.

Disclaimer: The content is intended for general informational purposes only and should not be construed as legal advice. If you require legal or professional advice, please contact an attorney.

Dr. Anton G. Maurer, LL.M., FCIArb, joined JAMS with decades of experience resolving cross-border disputes. He serves as an arbitrator, mediator and neutral evaluator, handling business/commercial, mergers and acquisitions, international, insurance, intellectual property, energy and utilities, engineering and construction, and telecommunications disputes.

[1] This complaint was raised in all Queen Mary studies from 2006 to 2021. See International arbitration: Corporate attitudes and practices 2006, at 19; 2015 International Arbitration Survey: Improvements and Innovations in International Arbitration, at 24; 2018 International Arbitration Survey: The Evolution of International Arbitration, at 8; 2021 International Arbitration Survey: Adapting arbitration to a changing world, at 2, 13 et seq.

[2] Gary B. Born, International Commercial Arbitration, 2nd Ed., at 84 seqq.

[3] These rules are often applied to or used as guidance in international arbitrations by agreement of the parties.

[4] Kaplan lecture 2010: Tainted Memories: Exposing the Fallacy of Witness Evidence in International Arbitration

[5] ICC Commission Report: The Accuracy of Fact Witness Memory in International Arbitration, published in June 2020