The Use of Experts in International Arbitration - Essay Example

Compare the use of experts in international arbitration (commenting on at least one civil and one common law jurisdiction) With the rapid strides made by the world financial and business communities, it has become imperative for businesses to have a proven method of resolving business disputes promptly, expeditiously and constructively. When businesses grow and expand it is natural that disputes will arise. In wake of this, parties often favor a private and informal settlement of disputes, in a businesslike fashion that enable them to further their business interests without strangling their business relationship. It is for such occasions that arbitration is designed—for prompt, pragmatic and efficient resolution of disputes. Arbitration is essentially a process of dispute resolution inspired by ones free will where a neutral third party renders a final and binding decision after the concerned sides have presented their views. This method is particularly useful in international business transactions where parties are often unfamiliar with foreign legal systems. The parties may reside in a number of different geographic locations, each subject to quite different laws and legal systems. Matters get much more complicated if their transactions involve activities in other jurisdictions, where they otherwise have no presence or familiarity. With stark deviations from a judicial procedure, arbitration is conducted outside the court system by disinterested arbitrators selected by the concerned parties based on the criteria that best suit the nature of the contract. In general, either one arbitrator or a panel of three arbitrators conducts arbitration, and the structure, format, site and scope of arbitration are decided by the parties and memorialized in the arbitration clause of their contract. Usually, the parties disuss the terms of the arbitration clause at the time they develop the initial contract. A decent provision always helps establishing a framework for efficient resolution of contract disputes. Unlike a court proceeding, arbitration allows the parties greater flexibility. They are entrusted with the right to decide time periods for responding to claims, the place where the arbitration will be conducted, how formal the process will be, or whether to involve lawyers in the arbitration. As such, international arbitration processes have become increasingly recognized throughout the world. These processes are extensively supported by legislation in various countries, including legislation adopting different international conventions or rules, such as the Panama Convention, the Vienna Convention or the UNCITRAL Model Law. In an international context, the background and experience of arbitrators holds immense significance. While selecting an arbitrator, it is imperative to consider matters like knowledge of the governing law of the contract and familiarity with the culture, language and process of the seat of the arbitration. On issues that the court is required to determine which are so far removed from a court’s experience, it needs to obtain the opinion of experts to help it determine the issue in question. “If matters arise in our law which concern other sciences or faculties, we commonly apply for the aid of that science or faculty which it concerns” 1 The expert witness is, thus, an exception to the exclusionary rule and is permitted to give opinion evidence. In civil litigation this has statutory authority: “Where a person is called as a witness in any civil proceedings, his opinion on any relevant matter on which he is qualified to give expert evidence shall be admissible in evidence” 2 Experts play an essential role in the service of arbitration tribunals. The term expert here refers to expert in fields other than law. The expert may act as the sole arbitrator, or may be a member of a plural tribunal. In any case, it’s highly important for an expert to have knowledge and experience of his or her field; the skills of logic and commonsense; an ordinary person’s sense of justice and fairness; skills of communication and exposition, at least related to the field of expertise. The appointment of a tribunal expert is covered by various legislations. Article 26 of the UNCITRAL Model Law refers only to experts and, sets out the natural requirements for the task. An expert or experts may be appointed - no prescription as to the nature of the expert - and, unless the parties agree otherwise, that expert must be available for examination. The Model Law also imposes a duty of co-operation on the parties. Article 263 states that 1) Unless otherwise agreed by the parties, the arbitral tribunal (a) may appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal; (b) may require a party to give the expert any relevant information or to produce, or to provide access to, any relevant documents, goods or other property for his inspection. (2) Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of his written or oral report, participate in a hearing where the parties have the opportunity to put questions to him and to present expert witnesses in order to testify on the points at issue. To study the use of experts in International Arbitration, two legal systems— that of China, and England can be taken as a point of departure. Before going into the issue of expert opinion, it must be noted that in the Peoples Republic of China, Arbitration is subject to state supervision. The State intervenes through courts in keeping with the legal provisions of the place where the arbitration is conducted. Arbitration, therefore, is a judicial activity and a part of Chinas judicial regime. The Arbitration Law of the Peoples Republic of China, promulgated on August 31, 1994, unified arbitration practices across the country and harmonizes Chinas arbitration system with internationally accepted principles, systems and practices. 4 Executive bodies called Arbitration committees are established in capital cities of provinces, municipalities and autonomous regions. Such a committee comprises of one chairman, two-to-four vice chairmen, and seven to 11 members. It is required for the chairman, vice chairmen and members to be legal and trade experts and individuals with working experience. The legal and trade experts should make up at least one third of the membership of an arbitration committee. With the implementation of its open-door policy, the Chinese Government came under increasing pressure to rectify the existing arbitration laws. As a result, the Chinese government was bound to frame its specialized Arbitration Laws. The Arbitration Law aims at providing a system of arbitration both foreign and domestic demands for expeditious resolution of disputes. With headquarters in Beijing, and branch offices in Shenzhen and Shanghai, the China International Economic and Trade Arbitration Committee is the only arbitration agency in China that deals in international economic and trade disputes. The Peoples Republic of China Arbitration Law, under Articles 39 and 40, has certain provisions for the appointment of experts in an arbitration tribunal. Article 39 states that “The arbitration tribunal may consult an expert or appoint an appraiser for clarification of the specific issues relating to a case. Such an expert or appraiser may be a Chinese or foreign organization or a citizen. The arbitration tribunal has the power to order the parties to submit or produce to the expert or appraiser any relevant materials, documents, or properties and goods for check-up, inspection, and /or appraisal, and the parties are so obliged as well.” Article 40 states thus, “The report of the expert or appraiser shall be copied to the parties for comments and if the arbitration tribunal considers it necessary and appropriate, the expert or appraiser shall attend the hearing to explain their report at the request of the parties.” Under provisions in Article 43, which requires the parties to "provide evidence in support of their own arguments", the arbitral tribunals may undertake investigations and collect evidence. Such investigations may call for the empanelment of experts/auditors, site visits and inspection. Moreover, under Article 44 of the PRC Arbitration Law, an arbitral tribunal may, if it considers necessary, submit a specialized issue for the appraisal by an appraisal department as agreed by the parties or as designated by the arbitral tribunal. Parties may, with the permission of the arbitral tribunal, request the appraiser to attend the hearing and to answer questions. Regarding confidentiality, Article 37 of the CIETAC Arbitration Rules restricts the experts along with all other participants in the arbitration, including the parties and their agents, the arbitrators, clerks, interpreters, and appraisers from disclosing to outsiders the substantive and procedural matters of the case in closed session hearings. Article 41 of the PRC Arbitration Law puts it at the discretion of the tribunals to decide whether to adopt the expert’s report. As such, an expert opinion might not be considered at all, if both parties do not find it satisfactory enough. Enforcing domestic arbitration awards in China is relatively simple. If a party refuses to comply withs an award made against it, the other party can apply to the court for enforcement. The court reviews the arbitration procedures adopted in the reference but does not require the evidence to be verified, nor does it investigate whether the law has been properly applied. In the absence of obvious material irregularity, the court enforces an award.   The enforcement of a domestic award for property located outside the jurisprudence of China is a bit complicated. Generally, it involves a request by the relevant Chinese court for judicial assistance from a foreign court. Such requests are invariably based on the principles of reciprocity and on bilateral or multinational agreements covering judicial assistance that China has signed. Awards granted by foreign arbitral bodies are recognized and enforced in China. Article 269 of the Civil Procedure Law provides that, enforcement is available means of seeking judicial assistance from the relevant Chinese court. The court will normally recognize and enforce a foreign award provided it is shown that the courts in the concerned foreign nation will similarly enforce an award made in China.   The Chinese court is also required to consider whether such an award does not contradict any relevant requirements set forth by Chinese law and that the execution of such an award is not detrimental to local public interest. If the court finds that execution of the award contradicts Chinese law, the foreign award will be refused and returned to the foreign court for re-consideration. Coming to the provisions in England, international arbitrations, here, are governed by Arbitration Act 1996 (of England). The preamble of the Act states that it is an act to restate and improve the law relating to arbitration pursuant to an arbitration agreement; to make other provision relating to arbitration and arbitration awards; and for connected purposes. Section 37 of this law has made provisions for the appointment of experts. It states that, “Unless otherwise agreed by the parties the tribunal may appoint experts or legal advisers to report to it and the parties, or appoint assessors to assist it on technical matters, and may allow any such expert, legal adviser or assessor to attend the proceedings; and the parties shall be given a reasonable opportunity to comment on any information, opinion or advice offered by any such person.”5 In the practice prevalent in England, under the Civil Procedure Rules (Article 35), the expert is not necessarily a tribunals expert but a single joint expert appointed jointly by the parties. This leads to his being instructed by the parties, sometimes jointly, sometimes in two separate sets of instructions. The Rules are new, and the implications of the approach are yet to develop. The “Ikarian Reefer”6 contains some of the principles of the practice for the use of experts in English Court proceedings. These principles certainly exert influence on arbitrators in common law systems. The principles stated in this case provide that expert opinions should be perceived as “independent product of the expert, uninfluenced as to formal content by the exigencies of litigation.” The expert ought to give objective and unbiased opinion on issues of his expertise. He should never assume the role of an advocate. If at any point the expert comes to change opinions, such change should be immediately intimated to the parties concerned through appropriate channel. The expert is considered to have duty towards the tribunal, not merely towards the party who appointed him/her. It is a global phenomenon in international arbitration for the expert’s evidences to be reduced to a written report. Therefore, it is imperative to consider matters like timing and sequence of exchange of expert’s reports at the initial stage of the arbitration. Opinions of the experts are generally based on the relevant documentation and written statements by the factual witnesses of the parties. Although the expert called by a party, is giving evidence to the court, his duty is to tell the truth to the court regardless of the interests of the party who has called him or who is asking him questions. This same scheme is spelled out in the new Civil Procedure Rules regarding expert witnesses. An expert witness is in a special position similar to that of the advocate. He is selected and paid by the party instructing him. Part of his duties includes advising the party instructing him. If that advice is negligently given the expert, like the lawyer, is liable. But once the expert becomes engaged on providing expert evidence for use in court7 his relationship to the court becomes paramount as set out in the CPR and he enjoys the civil immunity attributable to that function. Appointment of experts by tribunals is quite familiar to lawyers from civil systems, but has been quite an unusual practice for arbitrators and lawyers from common law jurisdictions. As such, most of the arbitration institutions and rules anticipate the appointment of an expert to the tribunal. The UNCITRAL Notes on Organising Arbitral Proceedings also highlight the importance of allowing the parties and the party-appointed experts an opportunity to comment on a written report of the tribunal-appointed expert. In such a situation, the parties’ primary concern essentially will be leaving any matters to the tribunal-appointed expert, who acts beyond the scope of their control. They therefore wish to have a fair amount of transparency in communications between the experts and the members. The issue of communication often becomes sensitive. In complex cases, the tribunal may seek help from an expert on technical matters. Yet the parties may want to be privy to such communications, for comments of the experts tend to have substantial bearings upon the final findings of the tribunal. Regarding a change in view, an expert must bring to the attention of the court a genuine change of view and explain why his or her view has changed, a change of view arising after having agreed a position in the course of a meeting of experts would always be the subject of very close scrutiny by the court and no doubt by counsel for the other side during cross- examination. An expert must not be soldier for a cause and must not take on the role of an advocate for one side8. In civil law jurisdictions like China, the tribunal attaches considerable weight to the views of the tribunal-appointed expert, although the tribunal is not compelled to follow the findings of the expert. However, the expert’s report is influential in decisions relating to technical issues. The parties, therefore, might wish to appoint their own expert to negate the views of the expert appointed by the tribunal. The tribunal might be reluctant to exercise its discretion on matters of allowing expert opinions to preclude the parties from adducing expert evidence from their own appointed experts. Sensitive issues might arise if the arbitrator uses his personal knowledge to arrive at conclusions. An arbitrator may depend on his background general knowledge, but reliance on specific personal knowledge is objectionable, at least without presenting it to the parties and affording them an opportunity to comment on them9. Where one member of a tribunal possesses relevant expertise, the remaining members of the tribunal should satisfy themselves that the expert is free from any bias, whether conscious or sub- conscious. It might happen that the expert member exerts unwarranted influences in discussions on technical issues; so they must guard against such happenings. Expert views should be considered only when they are necessary and appropriate. Also, an expert’s negligence may provoke the tribunal to pass a judgment against the client as evident in Stevens v Gullis10. Expert witnesses and readers should be aware of the robust line, which the courts are taking where parties to litigation, or the expert witnesses themselves, fail to comply with the requirements of the new Civil Procedure Rules ("CPR"). Although the CPR have no automatic effect on arbitrations, it is likely that arbitrators will be influenced considerably by these decisions11. During a “witness conference” in course of a hearing, instead of listening to expert sequentially under cross-examination, issues may be exchanged between all the relevant experts, the parties’ representatives and the tribunal, on an issue-by-issue basis. This might provide a more transparent and efficient way to narrowing down the technical issues. However, it still prevails that written reports of experts stand as direct testimony whereas oral expert evidence is limited to cross-examination and re-examination. It is a fact that the practice of courts across different judicial systems—common law and civil law—exerts influence on the practice of international arbitration tribunals. However, a better solution lies in harmonization of the rules and practice governing the taking and presentation of expert evidence in international arbitration, influenced both by civil and common-law traditions. Read More