How is international arbitration different from U.S. domestic arbitration?
Lawyers from both the civil law and common law worlds have influenced the development of international arbitration. Although there has recently been an “Americanization” of international arbitration, it is still very different from U.S. domestic arbitration and U.S. litigation. The litigation techniques used in U.S. courts and domestic arbitration do not transfer seamlessly to international arbitration. Below are some key differences.
Neutrality of party-nominated arbitrators
Under the Federal Arbitration Act, parties may appoint non-neutral arbitrators. In some domestic arbitrations, particularly in the insurance sector, it is now common practice to appoint biased arbitrators. But U.S. parties to international arbitrations would err if they appointed a non-neutral arbitrator.
In international arbitration, all arbitrators – including those appointed by the parties – are expected to be entirely impartial and independent. The UNCITRAL Model Law on arbitration – the shared law of 84 countries – allows for removal of an arbitrator where there are “justifiable doubts” about the arbitrator’s impartiality or independence. The “justifiable doubts” standard has been widely adopted by arbitral institutions.
Appointing a non-neutral arbitrator may result in the arbitrator’s removal and/or annulment of an award. It may also alienate other tribunal members. It is thus likely counterproductive, risking unnecessary costs and delays, and should be avoided.
Breadth of discovery
International arbitration generally involves significantly less discovery than U.S. domestic arbitration and litigation. American arbitration discovery is often broad, sometimes as broad as in U.S. litigation. It regularly involves depositions and document requests and production. Discovery in international arbitration is typically far more limited. There are no pre-hearing depositions and no interrogatories. There are no requests for admissions. Instead of fact or expert witness depositions, parties submit affidavits called “witness statements.”
In international arbitrations, parties usually seek disclosure only of documents that can be identified with particularity and that they have reason to believe exist. This restrained approach is reflected in the widely-followed IBA Rules on the Taking of Evidence.
Under IBA Rules, the onus is on the requesting party to show that a document is relevant to the case and material to its outcome. This is often considered a higher bar than in many American domestic proceedings.
The way a party’s actual submissions look is also different for international arbitrations. In many cases, parties will submit a “memorial.” This sets out a party’s claims and defenses in full. It also attaches all evidence from documents, witness statements, expert reports, and legal authorities supporting the claims and defenses.
The memorial, consolidating all information in one place, is distinct from the often-piecemeal submissions of American arbitration. In an American arbitration, a party might issue extensive discovery requests and take many depositions. There might be lengthy briefs filed on discovery issues. Parties might then separately brief dispositive motions. Later they might submit expert reports. Finally, they will compose pre-hearing submissions. That multi-step process, where argument is spread over many documents, differs from international arbitration’s practices.
After memorial submission, a tribunal typically holds a hearing. The style of these hearings might feel unusual to lawyers more familiar with U.S. domestic arbitration and litigation.
In international arbitration, hearings can span from a day to several weeks, depending on the number of witnesses and experts. Most commonly, it lasts five days. A hearing often starts with opening statements, followed by witness testimony (direct and cross-examination), tribunal questioning, and closing statements.
Because witness statements often substitute for testimony, direct examination is typically a formality. As for cross-examination, there are no depositions for counsel to review to preview testimony a witness might give. Counsel can rely only on the witness’s written statement. Also, U.S. federal and state rules of evidence are inapplicable. Counsel may not object to a line of questioning as they would in the courts.
Advocacy in international arbitration is frequently less aggressive and more measured than American-style advocacy. Being too bombastic risks alienating foreign arbitrators. And resorting to hyperbole often hurts counsel’s credibility.
International arbitration’s different style is partly a product of formalism. The influence of civil law and the style of UK practitioners engenders a certain collegial decorum, especially in investor-State disputes.
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International arbitration differs from U.S. domestic arbitration in many ways. Understanding these distinctions and preparing accordingly can make a world of difference.
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