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Tips Regarding Electronic Evidence and Disclosure in International Arbitration

June 2008
International Disputes Quarterly
Rahim Moloo

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While U.S. or U.K. litigation-style discovery is not permitted or desired in international arbitration, electronic evidence is still bound to affect the nature of international arbitrations.  This article seeks to identify some of the unique issues that will confront arbitral tribunals and arbitration counsel in dealing with electronic evidence.

Tip 1:  Consider the Application of the IBA Rules

When the parties to an arbitration believe that electronic evidence will play a significant part in the arbitration, they should consider whether they wish to have applied the IBA Rules on the Taking of Evidence in International Commercial Arbitration ("IBA Rules").

First, the IBA Rules are one of the few rules that explicitly include electronic information in its definition of "document."2  Second, the objections to requests for production in Article 9.2 are especially relevant to requests for the production of electronic evidence.  Of particular note, Article 9.2 permits a party to object to a request for production due to lack of relevance or materiality, unreasonable burden to produce the requested evidence, or considerations of fairness or equality that the tribunal determines to be compelling.3   While these objections permit the tribunal to exercise a significant amount of discretion in limiting the scope of requests for electronic documents, it is important to note that the standard for the various objections under Article 9.2 are not static.  For example, what is overly burdensome for one company may not be overly burdensome for another, and what is burdensome today may not be three years from now.4  This is especially true of electronic evidence, as electronic document management software becomes more sophisticated and prevalent.

Tip 2: Consider the Form of Production

With paper documents, all of the information is provided on the face of the document – not so with electronic documents.  Metadata is defined by the Sedona Glossary as "[d]ata typically stored electronically that describes characteristics of [electronically stored information ("ESI")], found in different places in different forms….  Metadata can describe how, when and by whom ESI was collected, created, accessed, modified and how it is formatted…."5   Of particular note, certain metadata can only be extracted if the document is produced in native format, and not when it is printed on paper or electronic image.6   One example of where metadata can be useful is when it is relevant to determine if a particular individual viewed a given document, or if and when that individual modified the document.  Another example of where metadata can be particularly useful is in determining how certain numbers were calculated in an excel spreadsheet.7  These examples illustrate how the form of production can be as important as the document that is being produced.

Tip 3: Seek the Preservation of Electronic Documents

An obvious consideration is the nature in which electronic documents are stored.  An electronic file is rarely deleted when an individual simply deletes it from his or her hard drive.  Instead, the information often remains stored on back-up drives.That being said, it can be a lot more difficult to obtain documents that are no longer on an individual's local drive.  As such, in certain circumstance, granting an order to preserve electronic evidence may be appropriate.  In deciding whether to grant an order to preserve electronic evidence, an arbitral tribunal will likely be guided by the relevant rules governing provisional measures.9

Tip 4:  Consider Narrow ESI Requests, Including Through the Use of Search Terms

To avoid fishing expeditions, it is critical that any request made for electronic evidence be specific (as would be required for document requests generally).10   Given the volume of ESI, it may be that the same specific request that would have resulted in relatively few hard copy documents being produced before will now result in a significant number of electronic documents being produced.  For example, a party may request all correspondence, including e-mails, sent from X to Y between March 2 to April 10, 2007 concerning Z contract, where X and Y are corespondents allegedly in breach of Z contract.  In making this request, there may now be numerous e-mails that must be produced where as before, there may only have been a few letters.  Electronic means of instantaneous communication has simply made it easier to respond quickly and more frequently, resulting in more potentially relevant documented evidence.

In attempting to recover relevant ESI, it may be useful for arbitrators to permit the use of agreed-upon search terms that can help filter through numerous electronic documents.11   Requests for communications between certain dates and individuals can be made even more specific by requiring the production of only those documents containing certain relevant search terms in those documents.

Tip 5:  Beware of Adverse Inferences Due to Non-Production or Non-Preservation of ESI

If a party fails to preserve or produce relevant electronic evidence, a tribunal may, in the appropriate circumstance, draw an adverse inference against that party regarding the content of the missing documentation.12   Before doing so, however, an arbitrator should consider certain additional factors to those normally considered under the applicable arbitration rules.13   First, a tribunal should consider whether producing the document would be overly burdensome on the non-producing party, and should weigh this factor against the importance of the evidence to determining the relevant facts.  Second, a tribunal should ensure that the missing electronic documents were not deleted as a result of the non-producing party's legitimate and reasonable document retention policy.14   For example, many companies will retain certain electronic documents only for a certain period of time.

Tip 6:  Plan for the Use of Electronic Evidence

What should arbitrators and arbitration counsel do to make electronic evidence a part of their arbitration?  First, counsel should ensure that they have reviewed relevant electronic evidence in formulating their case so that they are able to adduce all possible evidence in support of their client's position.  Second, the parties should consider whether they wish to have the IBA Rules govern the taking of evidence, including electronic evidence, in their arbitration.  Third, the parties should discuss issues pertaining to electronic evidence at the preliminary conference to ensure that the parties and the tribunal all agree on the role that electronic evidence will play in the arbitration.  Issues that may be discussed include the form of production of the electronic documents, any issues relating to the preservation of electronic (and other) evidence and guidelines for requesting electronic documents.  Fourth, counsel will want to discuss with their clients what ESI should be preserved and how.  This may simply require counsel to ensure that their client has a viable ESI retention policy in place.  Fifth, a party may wish to seek an order from the Tribunal to ensure the preservation of the other party's electronic evidence if the circumstances warrant such an order.

There is no doubt that electronic evidence has already become a reality in international arbitration.  While electronic evidence can and should play an important role in uncovering relevant facts in a case, arbitration counsel and arbitrators must ensure that they tread carefully and thoughtfully to ensure electronic evidence does not burden the fact-finding process, but facilitates it.

1 An extended version of this article appears in Mealey’s International Arbitration Report, Vol. 23, no. 4, April 2008.
2 IBA Rules on the Taking of Evidence in International Commercial Arbitration, International Bar Association (1 June 1999), Article 1.  Where the applicable rules do not refer to electronic evidence, the general provisions on document production can apply.  See e.g. UNCITRAL Rule 24(3) (stating "At any time during the arbitral proceedings the arbitral tribunal may require the parties to produce documents, exhibits or other evidence within such a period of time as the tribunal shall determine."); ICC Article 20(5) (stating "At any time during the proceedings, the Arbitral Tribunal may summon any party to provide additional evidence."); ICSID Arbitration Rule 34(2)(a) (stating "The Tribunal may, if it deems it necessary at any stage of the proceeding: call upon the parties to produce documents, witnesses and experts ….").
3 IBA Rules, Article 9.2(a),(c) and (g).  See also A Project of the Sedona Conference Working Group on Electronic Document Retention & Production, The Sedona Principles: Best Practices Recommendations & Principles for Addressing Electronic Document Production (2nd ed. June 2007), Principle 2 (stating that in balancing the cost, burden, and need for electronically stored information it is relevant to consider "the technological feasibility and realistic costs of preserving, retrieving, reviewing and producing electronically stored information, as well as the nature of the litigation and the amount in controversy.")
4 Richard D. Hill, The New Reality of Electronic Disclosure in International arbitration: A Catalyst for Convergence, Electronic Evidence and Disclosure in International Arbitration Juris Conference, New York (31 Jan. 2008) at 2-3.
5 The Sedona Conference Glossary: for E-Discovery and Digital Information Management, (2nd ed. December 2007), available at http://www.thesedonaconference.org/dltForm?did=TSCGlossary_12_07.pdf, at 33.
6 Id.
7 Where an excel spreadsheet is produced in native form, the viewer can click on an individual cell to determine how the number in that cell is derived.
8 John M. Barkett, E-Discovery for Arbitrators, Electronic Evidence and Disclosure in International Arbitration Juris Conference, New York (31 Jan. 2008) at 29.
9 See e.g. Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania, ICSID Case No. ARB/05/22, Procedural Order No. 1 of 31 Mar. 2006 at para. 88 (ordering the preservation of all documents, in both "electronic and hard copy" form pursuant to Article 39(1) of the ICSID Arbitration Rules).
10 See e.g. IBA Rules, Art. 3(3) requiring a request to include a description of the document sufficient to identify it or a description of a narrow and specific category of documents that are reasonably believed to exist.
11 See The Sedona Principles, supra note 3, Principle 11 (stating "A responding party may satisfy its good faith obligation to preserve and produce responsive electronically stored information by using electronic tools and processes, such as data sampling, searching, or the use of selection criteria, to identify data reasonably likely to contain relevant information.")
12 IBA Rules, Article 9.4, 9.5 (allowing a tribunal to draw an adverse inference for the failure to produce relevant evidence under certain circumstances.)
13 See Jeremy K. Sharpe, Drawing Adverse Inferences from the Non-production of Evidence, 22 ARB. INT. 549 (2006) for a discussion of the criteria for drawing adverse inferences for the non-production of evidence generally.
14 See Barkett, supra note 8 at 49 (asking "What if material records only exist on backup media and the backup media were recycled as part of the routine operation of an electronic records storage system?")

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