Contrasting U.S. Litigation And International Arbitration

by Carlton Fields
Contact

American litigators know that there is often a tortuous road between the filing of the complaint and trial. The parties’ positions, and how each side views the facts, tend to evolve through the initial pleadings, amended pleadings, motions to dismiss, documentary discovery, depositions, summary judgment motions, pretrial submissions, motions in limine, pretrial statements, trial briefs, and the course of trial itself. It is often not until after discovery is completed and summary judgment motions are decided that lawyers and their clients decide what facts they will actually try to prove at trial. And even then, they strive to preserve flexibility to respond to what occurs immediately prior to and during trial.

This luxury of not having to commit to a position until well into the process is not available to lawyers in international arbitrations. To the contrary, in most international arbitrations, parties and their counsel are required to commit firmly and early on to the facts they expect to prove to the arbitrator, and their cases often stand or fall based on these decisions. Understanding the essential differences between domestic litigation and international arbitration is critical for both lawyers and their clients.

Pleadings
First, some general background for those not steeped in international arbitration. Although the procedure differs somewhat among the various arbitration tribunals, in the overwhelming majority of cases the arbitral process begins with the filing of a “Notice of Arbitration” or “Request for Arbitration.” The purpose of these filings is to inform the respondent that arbitration proceedings have been started and that a particular claim has been alleged, to “apprise the respondent of the general context of the claim asserted against him,” and “to enable him to decide on his future course of action.” Gary B. Born, International Commercial Arbitration 1795 (2009). The notice or request is thus similar to a complaint in litigation, and, like the complaint, it is prepared and signed by a lawyer. Following the notice, the respondent has the opportunity, within a prescribed time frame, to file a response and to assert any counterclaims. These are similar in scope and substance to the request for arbitration. The claimant may then reply to the counterclaims.

Pleadings in international arbitration, however, are expected to be much more precise and fact-focused than their more familiar counterparts in domestic litigation. For example, when handling an international arbitration, you will not be permitted to employ the cryptic, boilerplate language that you may resort to in a federal or state court civil complaint. There your goal, after all, is far more modest; it is to allege enough facts to survive a motion to dismiss, while taking care not to commit to a specific position before you learn the lay of the land. You may even indulge in well-informed conjecture, “on information and belief,” that you hope to substantiate later through discovery.

In international arbitration, by contrast, pleading facts based on information and belief falls short of the mark when it comes to acceptable practice. Also, initial pleadings in international arbitration are amended very infrequently—so you need to get it right the first time around. They do not tend to evolve with the evidence, as is the case in litigation, where pleadings are almost always amended at least once, and sometimes three or four times, during the litigation process to fit the evidence as it develops.

After the parties have submitted their pleadings in an international arbitration, the next step is the constitution of the arbitral tribunal. This stage includes the selection of arbitrators and the assertion of any challenges and jurisdictional objections. The selection process may be as brief as one week or, in cases with significant disputes or challenges, may take up to two months. Once constituted, the tribunal will set a detailed procedural schedule. In most cases, absent the parties’ agreement (which is rarely reached), the arbitral tribunal has virtually unfettered discretion to determine the arbitral procedure.

For example, under Article 15(1) of the United Nations Commission on International Trade Law Rules, “the arbitral tribunal may conduct the arbitration in such manner as it considers appropriate, provided that the parties are treated with equality and that at any stage of the proceeding each party is given a full opportunity to present its case.” The major arbitral bodies—the International Chamber of Commerce, the International Centre for Dispute Resolution of the American Arbitration Association, and the London Court of International Arbitration—all have similar provisions in their rules.

Statutory regulations of arbitration procedures likewise do not significantly limit the arbitral tribunal’s autonomy to conduct the arbitration as it deems appropriate. The requirements of the Federal Arbitration Act, 9 U.S.C. § 1 et seq., for example, as interpreted by courts, will generally be satisfied upon a showing of procedural fairness, equal treatment, and adequate opportunity to be heard. As a practical matter, short of trial by ordeal, almost any procedure will do.

The procedural schedule set by the arbitral tribunal will typically provide for some discovery. Discovery in international arbitration, however, is nothing like the discovery that you normally experience in domestic litigation.

Discovery
Depositions, of course, are one of the two pillars of domestic discovery (the other being document production). In theory, the purpose of depositions is to uncover the truth, but the reality is that they tend to be cat-and-mouse games, conducted in an adversarial atmosphere, often contentiously so, with the two sides having conflicting goals.

As the examining lawyer on either side, you want to extract from the witnesses information that advances your case. Within the confines of the rules, the witness and counsel defending the deposition want to withhold as much harmful information and to provide as much selfserving testimony as possible. The measure of your success as examining counsel is whether you are able to lock the witness into a position that helps you at trial or, even better, in your effort to obtain summary judgment. From the deponent’s perspective, by contrast, a successful deposition is one in which the examining lawyer “got nothing”—nothing that would harm defending counsel’s case and limit the witness’s ability to testify effectively at trial when it really counts.

If you typically defend cases, you have seen plaintiffs change their theory of the case as recently as the last day of the discovery cutoff, when plaintiffs’ counsel files a supplemental expert disclosure, spinning out a new theory of causation. Conversely, if you are a plaintiffs’ lawyer, you have seen this from the other side. The defense adapts to what you have painstakingly developed in deposition by “correcting” or “supplementing” sworn testimony in an errata sheet or through the testimony of later-testifying witnesses. Or defense counsel might seek to launch a new theory through experts disclosed late in the case.

None of this is possible in international arbitration, for one reason: Depositions are not permitted, period. The first time that a lawyer examines the other side’s witnesses, including experts, is at the hearing—at trial. For a lawyer this means several things. First, you do not have the benefit of being able to develop and mold your case based on the evidence adduced in depositions. None of the strategic maneuvering engaged in by lawyers with the aim of placing their clients in a better position for trial is available in international arbitration. Second, you have to cross-examine hostile witnesses at the hearing “cold.” This is something particularly unsettling to litigators used to having a pulse on witnesses in the trenches of discovery. Third, you don’t know until the hearing how your own witnesses stand up to the pressure of truly adverse cross-examination. If your client becomes nervous and shifty-eyed under scrutiny, you may find this out for the first time at the hearing, together with the tribunal.

Documentary discovery, while available in international arbitration, is much more limited in scope than in U.S. civil litigation, requiring narrow and specific requests and a far more exacting showing of relevance and materiality than is the norm in litigation. The International Bar Association (IBA) Rules on the Taking of Evidence, for example, limit document requests to a “narrow and specific . . . category of documents that are reasonably believed to exist.” It is not uncommon for tribunals in international arbitrations to allow for discovery of no more than a handful of documents. The same matters, if litigated, would result in massive productions of thousands of documents “reasonably calculated lead to the discovery of admissible evidence.” Fed. R. Civ. P. 26(b)(1). Requests that begin with the formulaic “all documents concerning” or “all correspondence relating to” will more often than not be rejected by the tribunal. International arbitrators never tire of pointing out to American lawyers that they are not in a U.S. court and need to curb their appetite for discovery. Also, other litigation discovery devices, such as interrogatories, depositions on written questions, requests for admissions, physical and mental examinations, are, as a rule, unavailable in international arbitration.

Evidence Preparation and Submission
The most critical difference between litigation and international arbitration—and one that is intrinsically tied to the differences in the discovery processes—is the timing of both the preparation and the submission of evidence.

As a domestic litigator, you normally get down to putting your case together for trial after discovery is completed and the court has decided motions for summary judgment. It is at that point that you begin to contemplate your most important decisions: who your witnesses will be and what they will say. Once you decide who your trial fact witnesses will be, you will outline their direct testimony and prepare each witness thoroughly. Your goal is to avoid surprises that will thwart your theory of the case, while ideally throwing up roadblocks that will frustrate your opponent’s drive to the goalposts. As you prepare for trial, you will have the benefit of all the documents produced in discovery by the other side, as well as the prior deposition testimony of your opponent’s witnesses and any affidavits previously submitted by your opponent. If you have done your witness prep job well, you will have great assurance that your witnesses’ direct testimony at trial will contain no surprises and will fully support your client’s case. This sounds unremarkable, of course, to trial lawyers who work exclusively in state or federal court.

The process in international arbitration is radically different. The schedule set by the tribunal at the very beginning of the arbitration typically provides for sequential written submissions by the parties. These are usually spaced several weeks apart: claimant’s memorial, respondent’s counter-memorial, claimant’s reply, and respondent’s rejoinder. Each submission is required to contain a brief setting forth the legal and factual arguments in support of the party’s case; witness statements, both factual and expert; and documentary evidence on which the party relies. Each party thus gets two written submissions, each containing a legal brief, witness statements, and documents. Each subsequent submission is limited in scope to the issues raised in the opponent’s prior submission. The claimant’s initial submission is normally due about two months after the constitution of the tribunal.

Witness statements function as the direct testimony of witnesses at the hearing. Thus, under Article 4(5) of the IBA’s rules, a witness statement is required to provide “a full and detailed description of the facts and the source of the witness’s information as to those facts, sufficient to serve as that witness’s evidence in the matter in dispute.” Witness statements are typically narratives that strive to tell the complete story from the witness’s perspective and may run as long as 50 pages, with expert witness statements running even longer. At the time of the hearing, witness statements—often prepared several months earlier—will be offered into evidence as direct testimony, and the witnesses will be subjected to cross-examination on those statements by the opposing counsel. Oral direct testimony is virtually nonexistent in international arbitration (although some tribunals allow witnesses to supplement their written statements at the hearing, for a few minutes at the most).

As a rule, an arbitral tribunal will not admit into evidence at the hearing any testimony of witnesses under the control of a party that was not contained in a witness statement and submitted as part of one of the sequential memorials. Similarly, the tribunal likely will not admit into evidence documents that were not produced with the parties’ written submissions (or at least identified in them). These are two critical rules that draw the sharpest contrast between litigation and international arbitration. Although these rules normally carry a “reasonable cause” exception, tribunals tend to adhere to them strictly.

The implications of these rules for counsel in international arbitration are obvious. Unlike in domestic litigation, where you can adopt a wait-and-see attitude and track the development of the evidence before having witnesses commit to specific testimony, in international arbitration you must land on your facts and the manner in which you will present them early in the process and without the benefit of a record to help you (especially if you represent the claimant, whose written submission comes first). You must make many key strategic decisions—including who will testify; what each witness will and will not say; how they will say it; how you will navigate the anticipated hazards and, indeed, what those hazards might be; what documents the witness will and will not be shown and asked to explain; and many others—virtually at the inception of the arbitration. In domestic litigation, you have the luxury of waiting to make these decisions until the weeks and days before the trial on the basis of a substantial record. To a certain extent, this means you must lead with your chin in an international arbitration. If you do this carefully and well, you can hope to avoid the kind of knockout punch early in the fight that comes as a startling surprise to many U.S. litigators in international arbitration.

Originally published in the Litigation Journal by the American Bar Association (Fall 2013).

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Carlton Fields | Attorney Advertising

Written by:

Carlton Fields
Contact
more
less

Carlton Fields on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.