Arbitration agreements should begin with a default position of no disclosure of documents, a leading QC has argued.
Peter Rees QC of 39 Essex Street, and a former legal director of Shell, said for many disputes, each side had “all the documents it needs” and disclosure was a “time-consuming and expensive luxury”.
In a speech given in Hong Kong in his capacity as a member of Harbour Litigation Funding’s investment committee, Mr Rees said speed and flexibility had attracted people to arbitration, but “elasticity has gone and everything takes much longer to achieve and involves severe pain in getting there”.
The QC identified disclosure and use of experts as two areas where time and cost could be saved if counsel and arbitrators were willing to “abandon a formulaic approach”, adopt new ideas and be more flexible.
Mr Rees said that despite “little or no disclosure” in civil law jurisdictions, the moment a case went to arbitration, disclosure was assumed.
“The Anglo-Saxon, common lawyers have foisted onto a previously quick and flexible system the whole paraphernalia of document disclosure. Why?”
Mr Rees went on: “It seems to me that, looking at things logically, if disclosure of documents is needed at all in arbitration, there is a strong case for severely restricting it in common law arbitrations and, perversely, being more expansive in civil law arbitrations.
“Am I really suggesting no document disclosure in arbitrations? Yes, I am. Not in every arbitration, of course. I wouldn’t want to be accused of being inelastic, but I believe there are a large number of disputes where – on proper analysis of the law and what is needed to establish each side’s case – each side has all the documents it needs and document disclosure is a time-consuming and expensive luxury.”
Mr Rees said businessmen and their in-house counsel were used to evaluating and taking risk and could take a view on the possible downside of not being able to obtain documents from the other side in a dispute.
He said the best way of including a “no disclosure” provision in an arbitration clause was to include it in institutional rules and for institutions to adopt a ‘no disclosure’ default position.
On experts, the QC said one way to overcome the problem of different terminology, different methodology and addressing different issues was for experts to meet “before they have put anything in writing, before any report has been drafted, before they have committed to specific terminology or a particular methodology”.
After a ‘without prejudice’ discussion in the absence of lawyers, experts could produce a list of agreed terminology, methodology and agreed issues, so they only wrote reports on the things they disagreed on.
“Already, a huge amount of time and costs has been saved and everyone knows from an early stage, what the experts really disagree about.”
On ‘hot tubbing’ – the colloquial term for concurrent witness evidence – Mr Rees argued that there was no reason for this to take place only after both experts had been cross-examined, and suggested arbitrations would benefit from a “more elastic” approach.
“It is probably fair to say that the impartial, objective observer could assume that arthritis is prevalent in arbitration simply by looking at the age and physical fitness of many arbitrators,” he concluded.
“We may struggle with physical elasticity, but mental elasticity and agility is what is required. All involved – whether arbitrators, counsel, clients or institutions – need to ensure that they don’t simply take a standard approach to every case, that they don’t become arthritic.”