The Standard of Proof in International Arbitration

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У статті розглянуті аспекти визначення критерію доведеності у міжнародному комерційному арбітражі. Зокрема, увага зосереджена на проблемі індивідуалізації процесу визначення та запропоновані шляхи її вирішення.
Ключові слова: міжнародний комерційний арбітраж, арбітраж ad hoc, інституційний арбітраж.

The article describes aspects determining criterion of proof in international commercial arbitration. In particular, attention is focused on the problem of individualization process of determination and the ways to solve it.
Key words: international commercial arbitration, arbitration ad hoc, institutional arbitration.

The research of the German Institute of Arbitration (Deutsche Institution für Schiedsgerichtsbarkeit) shows that 90% of the international agreements in the sphere of global business contain some arbitration clause which stipulates that in the event of a conflict the parties to the contract should apply to the Court of International Arbitration [1, 6]. Therefore, international arbitration is becoming an increasingly common way to resolve disputes between entrepreneurs in many countries.
Assessing the purpose of consideration of any case in arbitration and the role that is played by referees, an attention should be paid to an extremely urgent problem, to my mind, related to this issue, which should be discussed, researched and further developed. The whole system of inaccuracies, which I have found, and an area for future reforms are connected with the notion of “own discretion,” which arbitrators are guided by in the arbitration proceedings while determining admissibility, sufficiency or reliability of evidence of the parties to the dispute. Taking into consideration the relevance and topicality of the research, I have decided to highlight the standard of proof from the view of “own discretion” of the referees in a plane of proof, weighing on the scales the rule of law and the own interests of both the disputing parties and the arbitrators.
The Article 2.5 of the Rules of the International Commercial Arbitration Court at the Chamber of Commerce of Ukraine [2] provides that arbitrators are independent, objective and impartial in the performance of their duties. The Article 4.1 also notes that the parties to the dispute must be treated equally and each party must be given every opportunity to express their position. However, the powers granted to the arbitration court include the power to determine the admissibility and appropriateness of any evidence.
The Law of Ukraine “On International Commercial Arbitration” [3] complements the right to determine the standard of proof of arbitrators with such categories as materiality and significance of any evidence (Art. 19.2). There is a question then: is it appropriate to speak of a single standard of proof? Does it exist at all? Is it possible to define the standards of appropriateness or admissibility of evidence in international arbitration? In my opinion, this question requires a systematic analysis from the side of both legislator’s presentation and the cumulative views of arbitrators in the plane of the very purpose of arbitration – to solve misunderstanding between the disputing parties and to achieve the compromise. This standard of proof should be evaluated as a tool to achieve this goal, and the views of arbitrators and the law on international commercial arbitration – as a kind of leverage on the effectiveness of an evidential force that can be used by the skillful hands of a lawyer to strengthen the chosen position.
Thus, while defining the basic categories that should guide the litigant in protection of their own interests, I have identified two fundamental vectors for determining the criterion of proof by arbitrators. Firstly, it is certainly an objective factor which makes an influence on the decision of an arbitrator in the case. The regulations of arbitration, the parties to the dispute may determine the scope of the admissibility of evidence, their sufficiency or reliability; these powers are separated according to the type of international arbitration, which governs the proceedings. The so-called institutional arbitration is conducted in accordance with the procedural rules (regulations) of a certain arbitration institution (organization). There are regional arbitration centers (such as the Cairo Regional Centre for International Arbitration) and some separate arbitration institutions. By choosing institutional arbitration, the parties rely on their experience, professional administrative staff and regulated possibilities to solve the issues related to the arbitration proceedings and the appointment of arbitrators. These arbitration institutions retain total non-interference in the settlement process, and if it is necessary they give referees only administrative assistance, such as sending correspondence to the parties, providing premises for hearing, interpreting services during the arbitration, etc. As to the competence of arbitrators, in the practice of international arbitration there are already established traditions and trends of determining by arbitrators of the course of the arbitration process and proof that differ depending on the used rules of arbitration, the country where the process takes place, and the experience of referees in the dispute. While accepting the proofs which each party gives, the panel of arbitrators determines the admissibility and appropriateness of a given evidential line. Summarizing the only standard of proof, each of arbitrators, who may be citizens of different countries, representatives of different legal systems and cultures, contributes to the solution of the conflict. The ability to defend his/her line persuasively shows the professionalism of a lawyer. It is worth noting that most national laws on international arbitration, as well as permanent arbitration institutions regulations do not contain clear guidelines or rules of evidence, still giving the advantage to the same “discretion” of arbitrators both in conducting of the research of evidence, and in assessing of their relevance, admissibility and materiality. That is, following objectively defined legal rules, the referees actually are not limited in their subjective belief while determining the standard of proof. An alternative way in this situation is the free choice of another kind of international arbitration.
Arbitration ad hoc, as opposed to institutional arbitration, is not conducted under any arbitration institution. The cases in such arbitration are heard by the arbitrators previously agreed by the parties. The arbitration agreement stipulates the procedure of hearing, although the parties may address to arbitrators to form such procedure or may note in the arbitration agreement the reference to accepted rules of arbitration ad hoc, in particular UNCITRAL Arbitration Rules. Arbitration ad hoc enables litigants to indicate their limitations related also to the evidence, determine the admissibility, sufficiency and other criteria, but the final decision rests with arbitrators who refer to established traditions, generally accepted rules, their own experience and discretion. That is, in any case there is a personal factor which influences the solution – whether proceedings are in institutional arbitration or in arbitration ad hoc. The only advantage of the second kind is the possibility to set the frame before it is made by referees, using their categories.
Analyzing the objective factors, it is easy to notice a regularity of direct influence of internal beliefs of referees in a dispute. Defining it as an obvious problem and the plane for reform, I want to note that the changes and further improvement should be made in the direction of strengthening of an objective regulation of the problem, that is to legitimize the general and special rules of hearing and prior consideration of evidential lines by arbitrators. You must first coordinate them with continental and common legal fields, a plurality of traditions. In my opinion, the uniform criteria of proof should be determined at the legislative level and classified according to analogous principles of justice, carried out at the national level. It should be borne in mind that international arbitrations, despite the existence of similarities, have their own peculiarities, caused not only by “national” affiliation, but also by the result of a long-term practice of the development of international arbitrations, which is known to be formed on the basis of an individual approach. So, in this case the most appropriate solution to the problem is to consolidate the special principles of arbitration proceedings at the international level by concluding conventions such as the New York Convention [4] or the UN Convention on Contracts for the International Sale of Goods (Vienna Convention on Contracts for the International Purchase and Sale of Goods) [5], taking into account the factor of national influence and vision of standard of proof by arbitrators through established intrastate traditions, that is to consolidate the criteria of distinction between these contradictions and at the same time the way for their generalization. The specialty of these principles should be based on the specific character of the concept of “arbitration” which sets forth interstate relations, ability to find compromise and independence of arbitrators. In this case it is an essential component to ensure a fair decision. At a special level the limits of interference into the process and conducting of the procedure by arbitrators should be clearly defined – separately for arbitration ad hoc, and institutional one. Then, at the basic level the fundamental components of the standard of proof should be noted, the threshold of admissibility and appropriateness of the given evidential line should be determined. After that, taking into consideration the specificity of the case in question, the materiality and significance of evidence should be stated, involving independent experts and conducting more research. The determination of the standard of proof should be based on the totality of these principles and values, founded on individual factors of arbitrators, although the frames of it are clearly defined in legal acts. The tool to achieve all abovementioned is a parallel consolidation of general principles of justice at the state level and their detailed definition. At the first glance, this will not affect the international arena, however, in my opinion, it will contribute to the development of an appropriate legal culture of citizens, since no person shall be denied the right to act as an arbitrator because of his/her nationality (Art. 11.1), that is any citizen of any state without considering his/her age, life position and priorities may act as an arbitrator. The reform and improvement of the judicial power at the national level will improve its position internationally. As an example, I want to mention the Constitution of the Fifth Republic of France, which contains a concise provision on the organization of the judiciary and its hierarchical structure and common rules for the administration of justice [6]. The legislative regulation of the judiciary in France is exceptional due to a special constitutional law which develops in detail the issue of constitutional principles of judicial power – “Organic Law on the Status of Master” 1978 and the Judicial Code of the French Republic on March 16, 1978.
After determining the impact of an individual factor in the plane of the objective regulation, it is necessary to conduct the analysis of each of the stages of evidence submission, powers of arbitrators in each of them, and the right to form the procedure and its rules by the parties themselves and their representatives, and, as a result, the impact of certain evidence and ways of its submission on determining of standard of proof by arbitrators.
So, first of all, it should be noted that the generally accepted rule of most national legal acts on international arbitration and arbitration regulations themselves – to submit together with a claim (reference) the main documentary evidence in support of the stated requirements (objections). Sometimes the hearing of the dispute in court may be based only on documentary evidence, but any of the parties to the dispute as well as the arbitrators may apply for an additional oral hearing. The legislation does not set uniform standards for the submission of documentary evidence that is why a counsel may submit the evidential documentation that best underlines its line arguments. However, despite some freedom for activity, the lawyer should make a detailed analysis of the practice of the process of evidence submission in a particular arbitration. For instance, as a warning it can be given some example of practice, when one of the disputing parties seeks to hide unwanted document, and the other is entitled to demand it for a wide hearing of arbitration proceedings. The same applies to demanding of any information and documents by arbitrators what is being widely used under the influence of common law.
In international arbitration there are hearings of witnesses (without submitting of legal arguments) and hearings on the merits of a case (it may have a mixed character, includes the hearing of witnesses). The main difference between the definition of standard of proof by the arbitrators of civil and common law is to whether or not to pay significant attention to oral hearings of witnesses and testimony of experts. Most legal systems of civil law do not consider the testimony of witnesses as a proper source of evidence, or even waive the hearing of them. The similar situation in the system of civil law is observed as for the testimony of an expert, whom they perceive as a previously hired and paid professional, and therefore do not consider as a proper source of evidence. It is generally set out that the lawyers take into consideration the expert testimony while deciding about the motion of oral testimony hearing or their omissions. However, in any case, in the choice of any kind of international arbitration the hearing of oral evidence of witnesses and experts, and generally the use of it as a source of evidence are the greatest expenses in a financial aspect and in the time dimension. The interpretation of their evidential value is carried out in an individual aspect of an arbitrator and, as a result, his/her definition of the standard of proof can lead to an unexpected result.
So, having a significant degree of discretion, the referees have the right to determine the standard of proof, taking into account the generally accepted rules and established traditions. The rules of the International Bar Association on research of evidence in international arbitration (International Bar Association Rules on Taking of Evidence in International Commercial Arbitration), 1999. [7] specify the provision and give the arbitrators the right to exclude, on demand of a party or at their own discretion, any evidence or refuse to grant it due to one of the following reasons:
•insufficient relevancy and materiality;
•legal obstacles or privileges (professional and other secret, conflict of interests) prescribed by law or the rules of professional ethics which an arbitral tribunal finds applicable in a particular case;
•excessive burden of submitting of evidence;
•loss or damage to the document;
•interest in protecting confidential information relating to the know-how, trade or state secrets, the other reasons of political or state significance that an arbitral tribunal finds important;
•considerations of justice and / or equality of the parties that an arbitral tribunal finds important.

Thus, having analyzed the objective and subjective factors which make an effect on the determination of the standard of proof by arbitrators, the conclusion may be drawn that the only criterion still does not exist. This is explained by the specific character of international arbitration and uniqueness of each case. However, in my opinion, the direction for further improvement is a harmonization of the national legislation with the legislative regulation of arbitration in the international arena in order to further resolve disputes and meet the interests of the parties. It is necessary to organize common rules and principles generally and distinguish special ones among them. As it was already noted, the definition of the standard of proof should be based on the totality of these principles and values, which are founded on individual factors of arbitrators, and still the frames of this factor will be clearly defined in legal acts. The reform should be made in implementing common standards in the regulation of the burden of proof that partially destroys self-government of arbitrators and improves the position of lawyers by giving them a simplified way to find the single standard of proof.

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