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College of Commercial Arbitrators Targets Disclosure of Documents in New Protocols

January 2011
Mayer Brown Article

The College of Commercial Arbitrators (CCA) is a US-based organization of commercial arbitrators that, among other things, develops best practices for the major stakeholders in arbitration: i.e., (i) business users and in-house counsel, (ii) arbitration providers, (iii) outside counsel and (iv) arbitrators.1 Recognizing that “[t]he major complaint against commercial arbitration is that it now can cost as much and take just as long as litigation,” the CCA, in August 2010, released Protocols for Expeditious, Cost Effective Commercial Arbitration (Protocols).2

Set forth below are the Protocols’ action items relating to limiting document disclosure for each of the stakeholders, as well as a short discussion of how those stakeholders have been approaching limiting document disclosure to date.

PROTOCOL I
BUSINESS USERS AND IN-HOUSE COUNSEL

Action 2. “Limit discovery to what is essential; do not simply replicate court discovery.”

  • “Place meaningful limits on discovery in the arbitration agreement or incorporated arbitration procedures.”
  • “[T]horoughly discuss the cost versus benefit of various courses of discovery” with outside counsel.
  • “[M]emorialize in writing,” for the benefit of outside counsel, the decision as to the nature and extent of discovery planned.

Various corporate counsel publications report that in-house counsel have already begun focusing their efforts on limiting document disclosure.3 In-house counsel are considering—and often putting into practice—significant limitations on document disclosure in arbitration agreements.4 In fact, in at least one case, corporate counsel has insisted on an arbitration agreement that prohibits document disclosure altogether.5

PROTOCOL II
ARBITRATION PROVIDERS

Action 3. “Develop and publish rules that provide effective ways of limiting discovery to essential information.”

  • Narrowly tailor the list of electronic disclosure custodians to include only those “whose electronic data may reasonably be expected to contain evidence that is material to the dispute and cannot be obtained from other sources.”
  • Filter data “based on file type, date ranges, sender, receiver, search term or other similar parameters.”
  • Limit disclosure to “reasonably accessible active data from primary storage facilities. Information from back-up tapes or back-up servers, cell phones, PDAs, voicemails and the like should only be subject to disclosure if a particularized showing of exceptional need is made.”
  • “[A]ddress the essential scope and limits of e-discov- ery,” including “handling of the costs of retrieval and review for privilege, the duty to preserve electronic information, spoliation issues and related sanctions.”
  • Permit parties to make electronic documents “available in the form most convenient and economical for it.”
  • Relieve parties “of the obligation to conduct a pre-production privilege review of all electronic documents” and allow clawback of privileged documents.
  • Have parties identify “likely informational needs and [agree] on what information needs to be preserved, in what format, and for how long.”

Arbitration providers have “been slower than the courts in common law jurisdictions” to address document disclosure.6 While some organizations have developed voluntary protocols that promote limiting document disclosure, most major institutions have been reluctant “to impose mandatory obligations[.]”7 For example, while the International Chamber of Commerce (ICC) Commission on Arbitration published Techniques for Controlling Time and Costs in Arbitration (ICC Techniques) to encourage controlling the duration and cost of arbitration by, among other things, limiting document disclosure, the ICC Techniques are not mandatory.8 Provisions regarding document discovery in the ICC’s mandatory rules—the ICC Rules of Arbitration—simply direct the arbitrator “to establish the facts of the case by all appropriate means … within as short a time as possible.”9 Under such a standard, an arbitrator has wide discretion to impose extensive document discovery on the parties.

The International Centre for Dispute Resolution (ICDR) is one of the few institutions that have imposed mandatory duties on arbitrators relating to document discovery. However, those duties are still not specific enough to achieve the goals set forth in Protocol II above.10 For example, the ICDR’s Guidelines direct the arbitrator to “manage the exchange of information among the parties in advance of the hearings with a view to maintaining efficiency and economy,” but they do not address whether it is appropriate to limit document disclosure to active data, restrict the number of custodians a party may request or waive preservation obligations.

PROTOCOL III
OUTSIDE COUNSEL

Action 4. “Seek to limit discovery in a manner consistent with client goals.”

  • “[C]ooperate with opposing counsel and the arbitrator in looking for appropriate ways to limit or streamline discovery in a manner consistent with the stated goals of the client.”

Recent trends suggest that agreeing to reasonable limitations on electronic disclosure with opposing counsel will be challenging in the absence of mandatory rules and/or an arbitrator that tightly controls the disclosure process. For example, in one recent international arbitration, outside counsel to the petitioner reported that it had sought “e-mails, accounting records, and certain public filings in electronic form” because its client “had almost no electronic information” and the respondent had “substantial amounts of [potentially responsive] ESI[.]”

Not surprisingly, cooperation among the parties to set reasonable discovery limits was non-existent. On the one hand, the petitioner had no incentive to limit or streamline discovery because the documents were entirely in the possession of the respondent. On the other hand, it was strategically unwise for the respondent to agree to even a reasonable amount of discovery.11 Accordingly, encouraging outside counsel, who are beholden to the interests of their clients, to streamline discovery may only come at the insistence of other stakeholders.

PROTOCOL IV
ARBITRATORS

Action 6. “Streamline discovery; supervise pre-hearing activities.”

  • “[M]ake clear at the preliminary conference that discovery is ordinarily much more limited in arbitration than in litigation[.]”
  • “[W]ork with counsel in finding ways to limit or streamline discovery in a manner appropriate to the circumstances.”
  • “[K]eep a close eye on the progress of discovery” and “promptly resolve any problems that might disrupt the case schedule (usually through a conference call preceded by a jointly-prepared email outlining the nature of the parties’ disagreements and each side’s position with regard to the dispute, rather than formal written submissions).”

Arbitrators now have a number of tools, in addition to Protocol IV, to assist in streamlining discovery. These include the ICDR Guidelines for Arbitrators Concerning Exchanges of Information,12 the ICC’s Techniques for Controlling Time and Costs in Arbitration,13 the Chartered Institute of Arbitrators’ Protocol for E-Disclosure in Arbitration14 and the International Bar Association Rules on the Taking of Evidence in International Arbitration.15

Notwithstanding this recent abundance of guidelines, it appears there is still room for further, more specific rules on how to reconcile the often conflicting understandings of what a “streamlined” arbitration entails between lawyers from civil law and common law countries.16 In civil law jurisdictions, “parties are relatively immune from orders to produce documents.”17 In common law jurisdictions, particularly the United States, parties are subject to broad document production rules that require them to preserve and produce mass quantities of ESI. Therefore, an arbitrator with a US or UK background routinely interprets “streamlined” to allow for far greater disclosure than an arbitrator with a civil law background.18

CONCLUSION
The Protocols are an excellent tool for encouraging all stakeholders to take steps to ensure that arbitration can return to its roots as a more efficient and less costly means to resolve disputes. While many of the stakeholders have made some effort to reduce one of the most costly aspects of arbitration—namely, document disclosure—adhering to the Protocols will result in a substantially greater level of success.



Footnotes:
  1. College of Commercial Arbitrators home page, http://www.thecca.net.
  2. College of Commercial Arbitrators, Protocols for Expeditious, Cost Effective Commercial Arbitration (Thomas J. Stipanowich et al. eds., 2010), available at http://www.thecca.net/CCA_Protocols.pdf. The Protocols were developed in the context of commercial arbitration in the United States. Id. at iv. Nevertheless, they are useful in other contexts, including international arbitration.
  3. M. Scott Donahey, Unique Considerations for the International Arbitration of Intellectual Property Disputes, 65 APR Disp. Resol. J. 38, 43 (2010).
  4. See id.
  5. See id.
  6. John J. Range and Jonathan M. Wilan, E-Discovery in Arbitration Leading Lawyers on Recovering Electronic Evidence, Meeting New Disclosure Guidelines, and Implementing Measures to Streamline the Process, Aspatore, 2010 WL 556203 (February 2010).
  7. See id.
  8. International Chamber of Commerce Commission on Arbitration, Techniques for Controlling Time and Costs in Arbitration, ICC Publication 843 (2007), available at http://www.iccwbo.org/uploadedFiles/TimeCost_E.pdf.
  9. International Chamber of Commerce, Rules of Arbitration Article 20(1) (1998), available at http://www.iccwbo.org/uploadedFiles/Court/Arbitration/other/rules_arb_english.pdf.
  10. International Centre for Dispute Resolution, ICDR Guidelines for Arbitrators Concerning Exchanges of Information (2008), available at http://www.adr.org/si.asp?id=5288 (hereinafter “ICDR Guidelines”).
  11. Range & Wilan, supra note 6.
  12. ICDR Guidelines, supra note 10.
  13. ICC Techniques, supra note 8.
  14. Chartered Institute of Arbitrators, Protocol for E-Disclosure in Arbitration (2008), available at http://www.ciarb.org/information-and-resources/E-Discolusure%20in%20Arbitration.pdf.
  15. International Bar Association, IBA Rules on the Taking of Evidence in International Arbitration (2010), available at http://www.ibanet.org/LPD/Dispute_Resolution_Section/Arbitration/Projects.aspx#ArbitrationRules.
  16. Jonathan L. Frank and Julie Bédard, Electronic Discovery in International Arbitration: Where Neither the IBA Rules Nor U.S. Litigation Principles Are Enough, Disp. Resol. J. 62, 68 (2008).
  17. See id.
  18. Steven Seidenberg, International Arbitration Loses its Grip: Are U.S. Lawyers to Blame? 96 APR A.B.A.J. 50, 55 (Apr. 2010).

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