Developments in Electronic Disclosure in International Arbitration

Transcription

1 151 Developments in Electronic Disclosure in International Arbitration David Howell* A key advantage of international arbitration is versatility. The ongoing efforts of the arbitration community to address the challenge of electronically stored information (ESI) exemplify the flexibility that arbitration provides to the tribunal, the parties and their counsel to meet the requirements of the dispute and the wishes of the parties. They also illustrate the adaptability that allows the application of appropriate techniques to address documentary disclosure where the originals of relevant and material documents are in electronic form. Given the particular challenges raised by the disclosure of electronic data, and the fact that some arbitrators, parties and their counsel may be unfamiliar with these issues, it is helpful for arbitration institutions to provide appropriate guidance to address potential problems and pitfalls. Guidelines and protocols for electronic disclosure can provide a helpful prompt or checklist. They can distil from the litigation experience only those principles that are appropriate and helpful in an arbitration context, always recognising the fundamental difference between the discovery obligation in common law litigation and the disclosure of documents in an arbitration. A number of international arbitration institutions have already introduced guidelines or protocols, including the AAA/ICDR, 1 the Chartered Institute * Partner and Co-Chair of the International Arbitration Group of Fulbright & Jaworski LLP and principal drafter of the CIArb Protocol for E-Disclosure in Arbitration, issued in October International Centre for Dispute Resolution (ICDR) Guidelines for Information Disclosure and Exchange in International Arbitration Proceedings. The ICDR is the international division of the American Arbitration Association (AAA) and the Guidelines were produced by the AAA Task Force on Exchange of Documentary and Electronic Materials.

2 152 Dispute Resolution International Vol 3 No 2 October 2009 of Arbitrators and the CPR. 2 The ICC 3 formed a working party in June 2008 to provide a report on techniques for the production of electronic documents and the IBA Rules on Evidence Subcommittee has formed a group to consider appropriate revisions to the IBA Rules on Evidence. Rules, guidelines and protocols for electronic disclosure ICDR guidelines In the course of 2006 the AAA undertook a review aimed at ensuring that its practices and procedures were responsive to the requirement that arbitration remained a cost-effective and expedient process for its end users. The AAA Taskforce on the Exchange of Documentary and Electronic Materials began its work in July It noted the apprehension, particularly in civil law jurisdictions, of a trend towards the Americanisation of international arbitration and therefore decided to focus on the exchange of documentary and electronic material. It considered that the AAA, as one of the leading dispute resolution service providers, was particularly well placed to proffer guidance to arbitrators, counsel and parties as to the best practice in tackling issues arising out of document disclosure and evidence gathering in international arbitration. In May 2008, the ICDR Guidelines for Information Exchanges in International Arbitration were issued. They are meant to apply to all international cases administered by the ICDR commenced after 31 May 2008, unless the parties agree expressly to opt out of their application. The Guidelines adopt a strictly minimalist approach to guidance on the disclosure of electronic documents, which are addressed in a single paragraph: 4. Electronic Documents When documents to be exchanged are maintained in electronic form, the party in possession of such documents may make them available in the form (which may be paper copies) most convenient and economical for it, unless the Tribunal determines, on application and for good cause, that there is a compelling need for access to the documents in a different form. Requests for documents maintained in electronic form should be narrowly focused and structured to make searching for them as economical as possible. The Tribunal may direct testing or other means of focusing and limiting any search. 2 CPR Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration was issued in December The ICC Task Force on the Production of Electronic Documents in Arbitration was formed in June 2008.

3 Developments in Electronic Disclosure in International Arbitration 153 The taskforce concluded that: no further provision made specifically with electronic disclosure in mind was appropriate. The concern of the Taskforce was that if further specific rules were to be developed, it might encourage a line of argument that issues in respect of electronic disclosure should be treated differently from similar issues arising in the context of any other documentary disclosure requests: the fact that such specific provision had been made could be said to be indicative of an acknowledgement that the general standard imposed by the Guidelines should not necessarily be applied to electronic disclosure. The Taskforce determined, therefore, that no separate guidelines would be drawn up for electronic disclosure. 4 CIArb Protocol for E-Disclosure in Arbitration The CIArb Protocol for E-Disclosure in Arbitration was issued in October As stated in the introduction ( Purpose of the CIArb Protocol for E-Disclosure in Arbitration ), it is not intended to be applied in all arbitrations but only in those cases in which the time and cost burdens of giving disclosure of electronic documents may be an issue. Nor is it intended to be overly prescriptive. The parties are free to agree otherwise than as provided. It is intended to act as a useful prompt or checklist for those arbitrators, parties and counsel who may be less familiar with the issues that may arise in giving disclosure of electronic data. 5 The CIArb Protocol flags for early consideration by the parties and by the tribunal those techniques and tools that are available to reduce the burdens of giving electronic disclosure in those cases in which issues relating to disclosure of electronic documents are likely to arise. 6 In such cases, the tribunal should raise with the parties the question of whether e-disclosure may arise for consideration at the earliest opportunity and in any event no later than the preliminary hearing. 7 It is summarised in further detail below. 4 John Beechey, The ICDR Guidelines for Information Exchanges in International Arbitration: An Important Addition to the Arbitral Toolkit, 63(3) Dispute Resolution Journal (2008). 5 Purpose of CIArb Protocol for E-Disclosure in Arbitration. 6 1 of the CIArb Protocol for E-Disclosure in Arbitration. The importance of early consultation on these issues by counsel for the parties, and the potential costs consequences of a failure to do so, were highlighted in the recent English High Court decision in Digicel (St Lucia) Ltd & Ors v Cable & Wireless PLC & Ors [2008] EWHC 2522 (Ch), per Morgan, J. 7 2 of the CIArb Protocol.

4 154 Dispute Resolution International Vol 3 No 2 October 2009 CPR Protocol A draft CPR Protocol on Pre-Hearing Disclosure of Documents and Information in Arbitration was circulated in early The CPR Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration was issued in December Recognising that there may be different expectations on the part of arbitration users and their counsel, the CPR Protocol offers various modes of electronic disclosure (listed in Schedule 2) ranging from minimal to extensive, so that the parties may choose the general way in which their arbitration proceedings will be conducted in the area of (inter alia) document disclosure. The listed modes of disclosure of electronic information range from disclosure by each party limited to copies of electronic information to be presented in support of that party s case (Mode A) to disclosure of electronic information regarding non-privileged matters that are relevant and material to any party s claim or defence, subject to limitations of reasonableness, duplicativeness and undue burden (Mode D). In addressing the disclosure of electronic information, the CPR Protocol states: Production of electronic materials from a wide range of users or custodians tends to be costly and burdensome and should be granted only upon a showing of extraordinary need. 8 Extraordinary need is not defined. Given the continuing advances in the methods, speed and costs of storage and retention of electronic data, it may be the case that gathering data from even a wide range of users or custodians will not be particularly costly or burdensome in the circumstances of the case. The circumstances of the particular case may in any event justify such efforts even if costly or burdensome, applying the balancing exercise described above. The CPR Protocol also provides that issues regarding the scope of the parties obligation to preserve documents for potential disclosure in the arbitration should be dealt with at an early scheduling conference or as soon as possible thereafter. 9 It may be noted that parties to an international arbitration are generally under no obligation to preserve documents and that sanctions for non-preservation tend to be limited to the drawing of negative inferences by the tribunal. However, preservation of documents may nevertheless be an appropriate matter for early consideration. 8 CPR Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration, Section 1(d)(1) (General Principles). 9 Ibid, at Section 1 (d) (3) (Preservation of Electronic Information).

5 Developments in Electronic Disclosure in International Arbitration 155 IBA Rules on Evidence revisions The Rules on Evidence Subcommittee of the IBA Arbitration Committee has commenced a wide-ranging review of the IBA Rules, first issued in The membership of this subcommittee reflects the views of arbitrators and arbitration counsel from a wide range of jurisdictions and legal traditions. One of the sub-groups of the Rules of Evidence Subcommittee is addressing issues of electronic disclosure. Progress is slow, perhaps reflecting the wide range of views expressed prior to and at the October 2008 IBA Annual Conference in Buenos Aires. It currently appears likely that these issues will be revisited in open forum at the October 2009 IBA Annual Conference in Madrid, before any proposals are finalised. The lengthy and careful process of consultation that led to the 1999 IBA Rules on Evidence resulted in a broad level consensus and acceptance that has been their greatest strength. This has made it possible for tribunals to recommend adoption of the 1999 IBA Rules as reflecting broadly accepted international arbitration practice. There is an obvious risk that revisiting the IBA Rules in their present form may disturb this hard-won status. Nevertheless, it is to be hoped that these efforts will result in adequate provision for the challenges posed by the disclosure of electronic documents, preferably in the form of a protocol or guidelines for disclosure of electronic documents to accompany the IBA Rules of Evidence, for use only in those cases where such issues arise, rather than changes to the IBA Rules on Evidence. The principles expressed in existing Rules 3 and 9 may be considered to apply equally to both paper and electronic documents. ICC Working Party on Techniques for Production of Electronic Information in International Arbitration In June 2008 the ICC established a working party to produce a report on Techniques for Production of Electronic Information in International Arbitration. The report is intended to identify the special challenges that arise from e-production and to set out factors and techniques that parties and arbitrators may consider adopting to deal with the production of electronic documents, without compromising the flexibility of the parties and the tribunal to address these challenges. The ICC report will hopefully be able to draw upon the progress made by other institutions in this area, as described above. A working draft report is under consideration but it is uncertain whether a final report will be issued before the end of A broader exercise is also underway to consider appropriate updates and additions to the ICC Rules on Arbitration.

6 156 Dispute Resolution International Vol 3 No 2 October 2009 Electronically stored information (ESI) Many parties now conduct substantially all of their business communications in electronic form. It is now common for the original copies of relevant and material documents and data in a dispute to exist substantially or even entirely in the form of ESI. Electronic data include not only but Word and Excel documents, PDF files, voic and many other forms of electronic communication. Electronic data may reside in a large number of locations, on desktops, laptops, hand-held devices multiple servers and websites, all maintained by a variety of custodians. This data includes both electronic documents and numerous fields of information about those documents, or metadata. 10 Electronic documents are created and exchanged with ease, commonly result in multiple iterations of the original document into copies, replies and successive amended versions. Many multiples of copies, and copies of copies, are regularly stored on back-up tapes as data is deleted from hard drives and servers. The rapid changes in the computing environment gives rise to issues of legacy data, which may have been created in formats no longer in common use and no longer readily accessible by current tools. The ease of creation, low cost of storage and the existence of multiple copies of the same document can lead to unimaginably large volumes of electronic data. One gigabyte 11 of files in MS Word format is equivalent to approximately 50,000 pages of text. Large businesses frequently deal in terabytes or petabytes of electronic data. 12 Multinational companies face the added challenge of collecting electronic data from disparate sites and servers in foreign jurisdictions, given the restrictions on data transfer that may be imposed by data privacy legislation (for example, in many EU countries 13 ), a breach of which may carry severe penalties. Commercial parties to international commercial arbitration may already have had considerable experience in managing their electronic data to 10 Sometimes referred to a data about data, metadata is data describing context, content and structure of records and their management through time, including schema, table, index, view and column definitions. Metadata provides such information as the creation date, author, document title, edits, changes and hidden notes. 11 A measure of computer processor storage and real and virtual memory, a gigabyte is 2 30 bytes or 1,073,741,824 bytes in decimal notation. 12 A terabyte is 1,000 gigabytes and is 2 40 bytes or 1,099,511,627,776 bytes in decimal notation. A terabyte of text printed out would create 500,000,000,000 text pages, a paper stack 85,000 feet high. A petabyte is 1,000 terabytes. 13 Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data, implemented in 1995.

7 Developments in Electronic Disclosure in International Arbitration 157 meeting the substantial demands of litigation or regulatory investigations. In-house counsel and IT departments may have had to meet the challenge of collecting and producing electronic documents under heavy time pressure in the context of court proceedings or a regulatory investigation. Those efforts may have required them to rapidly collect relevant information from a large volume of electronic data created by many custodians in a variety of locations, under threat of sanctions and often at significant cost. In addition to the requirement to efficiently organise electronic data for ordinary business needs, litigation readiness has become a key driver in the improvement of data management systems and tools. Whilst parties will often use the assistance of external IT providers, to whom part of this work may be outsourced, these tasks are increasingly being brought in-house in order to better manage costs. While these experiences will have provided a powerful incentive to improve the organisation and efficiency of corporate data systems, to reduce the time and cost of data collection, very few companies have yet developed fully-centralised data management systems ( enterprise systems 14 ) that would facilitate the rapid identification and retrieval of electronic data. For most companies, the high cost of introducing such cutting-edge data management systems has so far meant that these efficiencies still lie in the future. But these developments are now underway and will affect purchasing decisions when existing systems come to be replaced. There is nevertheless some cause for optimism. Although the volume of electronic data continues to expand rapidly, the constant improvements in the tools and techniques for electronic data organisation and recovery have the potential to reduce the time and cost burdens of giving documentary disclosure, as compared with a paper environment. Techniques and tools include the use of search terms, de-duplication, concept and context searches which provide clustering of relevant documents and categorisation and near-duplicate findings. The leading-edge developments are currently in the area of improved methods of filtering to assist in document review (including multi-language review). This is a changing paradigm. As new search techniques and tools are developed arbitral tribunals must be alive to these advances, to be able to adequately consider and rule upon requests for disclosure of relevant and material electronic documents. For example, the recovery of data from back up tapes, once assumed to be an important threshold in making any order for electronic disclosure, has now become very much quicker and cheaper. 14 This has been described as the ability to google an organisation s entire database in real time in order to identify relevant documents.

8 158 Dispute Resolution International Vol 3 No 2 October 2009 Electronic documents and international arbitration International arbitration is not litigation. Disclosure of electronic data in international arbitration has provoked vigorous expression of a wide range of views, from those that believe that the challenge can be usefully met by guidelines, protocols or institutional rule changes to those who believe that existing rules make adequate provision for electronic disclosure and that additional measures are both unnecessary and inappropriate. Some have suggested that ESI is simply a non-issue in international arbitration. 15 Nor do these different views simply reflect the traditional difference in approach to documentary disclosure of lawyers from civil and common law backgrounds. There is an important process of learning underway as arbitrators, and some counsel, become familiar with this area. The need for this is unsurprising and reflects the fact that the issue of electronic disclosure does not arise in all, or even a majority, of international arbitrations. Most arbitrations concern relatively small numbers of relevant documents, which the parties will normally choose to produce in the form of hard-copy paper documents. However, in some cases it will be necessary to address the particular challenges that arise when disclosure is sought of relevant and material documents that exist in electronic form. While the principal focus of the discussion of electronic disclosure in international arbitration has been on the twin threats of increased time and costs, it should also be considered that electronic disclosure offers the potential for substantial efficiencies and time and cost savings. There is clearly a broad and strong consensus among arbitration users from both civil and common law jurisdictions that litigation-style discovery (in particular US litigation-style discovery), which is based upon a positive obligation to disclose and produce all non-privileged documents relevant to the issues pleaded (whether helpful or harmful to a party s case), has no place in international arbitration. The obligation to give discovery in a common law litigation context is frequently extremely burdensome. That obligation may be enforced by serious sanctions and penalties that can be applied to parties and their counsel. 16 Indeed, the obligation to give discovery in litigation may be so onerous that it is frequently used as a tactical weapon to procure settlement. Under the English Civil Procedure Rules (CPR), the obligation of standard disclosure in litigation compels a party to disclose materials 15 See, eg, Michael E Schneider, A Civil Law Perspective: Forget E-discovery!, in David J Howell (ed), Electronic Disclosure in International Arbitration (Juris Publishing 2008). 16 Coleman (Parent) Holdings Inc v Morgan Stanley, Inc 2005 WL Fla Cir Ct; and Qualcomm Inc v Broadcom Corp 2008 US Dist LEXIS 911, 7 January 2008.

9 Developments in Electronic Disclosure in International Arbitration 159 on which it intends to rely; that adversely affect its own case; that adversely affect another party s case; or that support another party s case. The scope of litigation discovery in the United States is wider and extends to any material relevant to the subject matter of the action and also any material that appears reasonably calculated to lead to discovery of admissible evidence. This is similar to the English position before the CPR, when parties were required to produce all background materials and any documents leading to a train of enquiry, in addition to all documents supportive of or adverse to each party s case. Civil law jurisdictions impose few, if any, documentary disclosure obligations on parties to litigation. Although some arbitral rules require the parties to disclose documents on which they choose to rely, 17 there is no disclosure obligation in arbitration equivalent to the wide obligation of discovery that exists in litigation in many common law jurisdictions. The arbitration rules agreed by the parties or the arbitral law of the agreed seat of the arbitration will frequently give the tribunal a discretionary power to order the production of documents. 18 However, it is not appropriate to speak of a discovery obligation in international arbitration. Rather, it is appropriate to speak of the disclosure of documents in arbitration proceedings. Terminologically, it may be considered that production normally connotes the delivery of documents, whereas disclosure (like discovery in a litigation context) covers the broad spectrum of requests for, and objections to, the physical production of otherwise relevant and material documents, and encompasses production. Documents relevant and material to the outcome of the case There has been a substantial convergence in international arbitration practice and procedure, even though the parties to an international arbitration will frequently come from different cultural and legal traditions. The main instruments of this convergence have been the 1958 New York Convention, 19 the UNCITRAL Arbitration Rules, 20 the UNCITRAL Model Law 21 and the rules of the various international arbitration institutions, which frequently borrow from each other with each successive revision. 17 For example, Article 15.6 of the LCIA Arbitration Rules. 18 For example, Article 20(5) of the ICC Rules; Article 19 of the ICDR International Arbitration Rules; Article 22(e) of the LCIA Arbitration Rules; and Article 24(3) of the UNCI- TRAL Arbitration Rules. 19 New York Convention on the Recognition and Enforcement of Awards of UNCITRAL Arbitration Rules adopted on 5 December UNCITRAL Model Law on International Commercial Arbitration adopted on 21 June 1985.

10 160 Dispute Resolution International Vol 3 No 2 October 2009 In matters of evidence, this convergence is reflected in the 1999 IBA Rules on the Taking of Evidence in International Commercial Arbitration (the IBA Rules ), 22 the product of an extensive process of consultation that included arbitrators and counsel from both civil and common law jurisdictions, which has given the IBA Rules a broad acceptability over the past ten years. The IBA Rules makes permissible narrow and specific requests for documents, or categories of documents, that are considered relevant and material to the outcome of the case. 23 However, the tribunal may at its discretion refuse such a request on the grounds, inter alia, of unreasonable burden to produce the requested evidence, as well as on the basis of considerations of fairness or equality of treatment of the parties. 24 Balancing exercise The exercise of that discretion will require the tribunal to balance considerations of the amount and nature of the dispute, and the likely relevance and materiality of the documents requested to the outcome of the case, against the cost and burden of giving disclosure. That balancing exercise will also be influenced by the legal and cultural background of the tribunal and counsel. Arbitrators and counsel from civil law jurisdictions, in which the production of documents is usually restricted to documents upon which a party chooses to rely, may be less disposed to make orders for disclosure than arbitrators from common law jurisdictions. The parties remain free to reach agreement on limiting the scope of documentary disclosure, either prior to or during the arbitration proceedings. It therefore lies in the hands of the parties, their counsel and the tribunal to address the appropriate scope of the documentary disclosure that will be permitted in an international arbitration. E-disclosure in international arbitration A perennial challenge in international arbitration is meeting the overriding requirements of fairness and equality of treatment and allowing the parties an opportunity to present their case, 25 while adequately controlling time 22 IBA Rules on the Taking of Evidence in International Commercial Arbitration adopted by a resolution of the International Bar Association Council on 1 June Article 3.9 of the IBA Rules. 24 IBA Rules Article 9.2 of the IBA Rules. 25 Article 18 of the Model Law.

11 Developments in Electronic Disclosure in International Arbitration 161 and costs. 26 The complaint is frequently heard from users that arbitration too often resembles litigation and is equally if not more expensive and time-consuming. This is often the result of counsel simply applying their litigation practice in an arbitration context. However, if it is accepted (as reflected in the IBA Rules) that parties should be entitled to seek disclosure of documents that are relevant and material to the outcome of the case, having due regard to balancing the amount and nature of the dispute, the likely relevance and materiality of the documents and the cost and burden of giving disclosure, it is not productive to take the position that electronic disclosure has no place in international arbitration. Rather, it is appropriate to address constructively the proper application of the balancing exercise to be conducted by the tribunal given the special considerations that arise in the giving of electronic disclosure. Arbitrators and counsel are required to get to grips with these issues if they are to meet the requirements of the dispute and the wishes of the parties. Drawing selected lessons from litigation experience It is instructive for international arbitration practitioners to observe the parallel developments in electronic disclosure that have taken place in a litigation context in the United States, and the experience of US in-house counsel faced with the often onerous challenges of electronic discovery. While many will say that commercial parties resort to arbitration precisely in order to avoid these experiences, which are to be avoided in international arbitration at all costs, these lessons are instructive for the purpose of informed debate on how best to address the issue of disclosure of electronic documents when and to the extent that this issue arises in international arbitration. The most helpful groundwork in the litigation area was performed by the Sedona Conference, commencing in 2002, in which knowledgeable counsel, judges and IT experts sought to address discovery of electronic data in a litigation context. The result of those efforts was the Sedona 26 For example, Section 33(1)(a) of the English Arbitration Act 1996 imposes a positive duty on the tribunal to adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined. Article 14.1 of the LCIA Arbitration Rules provides: The parties may agree on the conduct of their arbitral proceedings and they are encouraged to do so, consistent with the Arbitral Tribunal s general duties at all times: (ii) to adopt procedures suitable to the circumstances of the arbitration, avoiding unnecessary delay or expense, so as to provide a fair and efficient means for the final resolution of the parties dispute.

12 162 Dispute Resolution International Vol 3 No 2 October 2009 Principles on the Disclosure of Electronic Data, which were issued in and reissued in The work of the Sedona Conference was drawn upon in the Cresswell Report of in the United Kingdom, resulting in the Practice Direction to Part 31 of the English Civil Procedure Rules (CPR 31) in November 2005, 30 followed by amendments to the US Federal Rules of Civil Procedure 31 in December A number of practical techniques for addressing the disclosure of electronic documents can be drawn from these efforts. They include the essential principle of early consideration of electronic disclosure by the parties, their counsel and by the tribunal, in those cases (by no means all arbitrations) in which the time and cost of electronic disclosure may become burdensome and contentious. Cost shifting Under most arbitration rules, the tribunal has a discretion to award costs, including the costs associated with documentary disclosure, in the absence of agreement between the parties. The allocation of costs is one means available to the tribunal to moderate the potentially oppressive effects of extensive requests for electronic disclosure. In a litigation context, Sedona Principle 13 permits the shifting of all or some of the costs of production from the producing party to the requesting party where the electronic data sought are not reasonably accessible. Factors to be applied include the extent to which the request is specifically tailored to discover the relevant information; the availability of such information from other sources; the total cost of production compared to the resources available to each party; the relative ability of each party to control costs and its incentive to do so; the importance of the issues at stake; and the relative benefits of obtaining the information. 27 Sedona Principles: Best Practices, Recommendations and Principles for Addressing Electronic Document Production, January The Sedona Principles for Electronic Document Production, 2nd edn, produced by the Sedona Conference Working Group on Best Practices for Electronic Document Retention and Production, June The English Commercial Court Working Party s Report on Electronic Disclosure was published on 6 October The Working Party, chaired by Mr Justice Cresswell, was set up under the auspices of the Commercial Court Users Committee. 30 See: See also the Practice Direction to CPR 31 (October 2005), available at: part31.htm. 31 A number of substantive revisions were made to the Federal Rules of Civil Procedure (FRCP), effective 1 December Some of the most significant changes were made to Rule 26, which governs the production of evidence in most federal court cases, in particular as the rule applies to electronically stored information (ESI).

13 Developments in Electronic Disclosure in International Arbitration 163 In the context of the balancing exercise to be conducted by the tribunal in considering a request for disclosure, it is open to the requesting party to offer to bear the cost of disclosure, either on a final basis or subject to the final discretionary award on such costs dependent upon the outcome of the arbitration. Such an offer may tip the balance in favour of an order for disclosure, where the costs of compliance would otherwise be a basis for objection, in all the circumstances of the case. Privilege Large volumes of electronic data may include documents that are privileged under the applicable law or procedure. The producing party is particularly vulnerable to the inadvertent disclosure of privileged material, with the accompanying risk of deemed waiver of privilege, unless a careful and potentially expensive review is made to identify claim privilege in respect of such documents. Sedona Principle 10 suggests that a responding party should follow reasonable procedures to protect privileges and objections in connection with the production of electronically stored information. The introduction to the Sedona principles states that Sedona Principle 10 was intended to emphasise the need for reasonable, mutually agreedupon procedures to protect privileges and objections to production. CPR section provides [w]here a party inadvertently allows a privileged document to be inspected, the party who has inspected the document may use it or its contents only with the permission of the court. In an arbitration context, Article 9.2(b) of the IBA Rules allows the tribunal to refuse an order for disclosure if there is a legal impediment or privilege under the legal or ethical rules determined by the tribunal to be applicable. Parties wishing to protect themselves against inadvertent waiver of privilege may consider entering into quick peek or claw back agreements with the requesting party. Under a quick peek agreement, the parties agree to disclose information before production but reserve the right to assert privilege later in the disclosure process. Under a claw back agreement, the parties agree a procedure for the return of inadvertently produced privileged material within a reasonable time of its disclosure. The parties can seek to have such agreements confirmed or reflected in an order or direction of the tribunal.

14 164 Dispute Resolution International Vol 3 No 2 October 2009 CIArb Protocol for E-disclosure in Arbitration The CIArb Protocol is intended to act as a useful prompt or checklist for those arbitrators, parties and counsel who may be less familiar with the issues that may arise in giving disclosure of electronic data. It has been described as procedure medium, as compared with the ICDR Guidelines ( procedure light ) and the CPR Protocol ( procedure heavy ) 32. The CIArb Protocol flags for early consideration by the parties and by the tribunal those techniques and tools that are available to reduce the burdens of giving electronic disclosure, in those cases in which such issues may arise. Matters for early consideration may include: (i) Whether documents in electronic form are likely to be the subject of a request for disclosure (if any) during the course of the proceedings, and if so; what types of electronic documents are within each party s control, and what are the computer systems, electronic devices, storage systems and media on which they are held. 33 (ii) What (if any) steps may be appropriate for the retention and preservation of electronic documents, having regard to a party s data retention policy and practice (provided that it is unreasonable to expect a party to take every conceivable step to preserve every potentially relevant e-document). 34 (iii)what rules and practice apply to the scope and extent of disclosure of electronic documents in the proceedings, whether under the agreed arbitration rules, the applicable arbitral law or under any agreed rules of evidence (eg, the IBA Rules). 35 (iv) Whether the parties have made, or wish to make if they have not done so, an agreement to limit the scope and extent of electronic disclosure of documents. 36 (v) What tools and techniques 37 may be usefully considered to reduce the burden and cost of e-disclosure (if any), including: a) limiting disclosure of documents or certain categories of documents to particular date ranges or to particular custodians of documents; b) the use of agreed search terms; c) the use of agreed software tools; d) the use of data sampling; and e) the format and methods of e-disclosure. 32 The IBA Rules of Evidence: What to do about Electronic Disclosure, James H Carter, IBA Arbitration Day, Dubai, February CIArb Protocol for E-disclosure in Arbitration, at 3(i) and (ii). 34 Ibid, at 3(iii). 35 Ibid, at 3(iv). 36 Ibid, at 3(v). 37 Ibid, at 3(vi).

15 Developments in Electronic Disclosure in International Arbitration 165 (vi) Whether any special arrangements with regard to privilege or waiver of privilege in respect of electronic documents disclosed may be agreed. 38 (vii) Whether any party and/or the tribunal may benefit from professional guidance on IT issues relating to e-disclosure having regard to the requirements of the case. Reflecting the appropriate scope of disclosure in international arbitration contained in the IBA Rules, any request for the disclosure of electronic documents should properly contain a description of the document or a narrow and specific requested category of documents; a description of how the documents requested are relevant and material to the outcome of the case; a statement that the documents are not in the possession or control of the party requesting the documents, and a statement of the reason why the documents are assumed to be in the possession or control of the other party. 39 In making any order or direction for e-disclosure, or for the retention and preservation of electronic documents, the tribunal should have proper regard to the appropriate scope and extent of disclosure of electronic documents in the proceedings, whether under the agreed arbitration rules, the applicable arbitral law or any agreed rules of evidence (eg, the IBA Rules). The tribunal should also have due regard to any agreement between the parties to limit the scope and extent of disclosure of documents. 40 In making any order or direction for e-disclosure, the tribunal should have regard to considerations of reasonableness and proportionality; fairness and equality of treatment of the parties and ensuring that each party has a reasonable opportunity to present its case, by reference to the cost and burden of complying with the order or direction. This will require balancing considerations of the amount and nature of the dispute and the likely relevance and materiality of the documents requested against the cost and burden of giving e-disclosure. 41 The primary source of disclosure of electronic documents should be reasonably accessible data, namely active data, near-line data or offline data on disks. In the absence of particular justification, it will normally not be appropriate to order the restoration of back-up tapes; erased, damaged or fragmented data; archived data; or data routinely deleted in the normal course of business operations. A party requesting disclosure of such electronic documents may be required to demonstrate that the relevance and materiality outweigh the costs and burdens of retrieving and producing 38 Ibid, at 3(vii). 39 Ibid, at Ibid, at Ibid, at 6.

16 166 Dispute Resolution International Vol 3 No 2 October 2009 the same. 42 However, in considering these issues due regard must be paid to improvements in the available techniques for recovery of electronic data (for example, in the recovery of data from back-up tapes). The production of electronic documents ordered to be disclosed should normally be made in the format in which the information is ordinarily maintained or in a reasonably usable form. The requesting party may request that the electronic documents be produced in some other form. In the absence of agreement between the parties, the tribunal should decide whether production of electronic documents ordered to be disclosed should be in native format or otherwise. 43 A party requesting disclosure of metadata in respect of electronic documents should be required to demonstrate that the relevance and materiality of the requested metadata outweigh the costs and burdens of producing the same, unless the documents will otherwise be produced in a form that includes the requested metadata. 44 The tribunal should consider the appropriate allocation of costs in making an order or direction for e-disclosure. 45 The judicious use of cost shifting may be an effective means of controlling requests for electronic disclosure, with the ultimate decision on where such costs will ultimately lie being reserved for the final award on costs. The tribunal should establish a clear and efficient procedure for the disclosure of electronic documents, including an appropriate timetable for the submission of requests for e-disclosure and compliance with the same. 46 It will be obvious that early consideration of e-disclosure issues is essential in fixing the procedural timetable for documentary disclosure. The tribunal should require that a producing party gives advance notice to the requesting party of the electronic tools and processes that it intends to use in complying with any order for disclosure of electronic documents. 47 This may be of considerable practical importance if objections to the adequacy and cost of these measures can be raised only after they have been carried out. The tribunal may, after discussion with the parties, obtain technical guidance on e-disclosure issues as it considers necessary and appropriate. Such discussion shall include who shall be instructed to provide technical guidance and the costs expected to be incurred. The costs of the same shall 42 Ibid, at Ibid, at Ibid, at Ibid, at Ibid, at Ibid, at 12.

17 Developments in Electronic Disclosure in International Arbitration 167 be included in the costs of the arbitration. 48 The tribunal should expect to be able to look to the assistance of counsel for the parties in the first instance. Familiarity with e-disclosure issues may be amongst the factors influencing the parties choice of arbitrator(s) in those cases in which issues of electronic disclosure are expected to arise. In the event that a party fails to provide disclosure of electronic documents ordered to be disclosed or fails to comply with any agreement between the parties or any order of the tribunal as to the giving of electronic disclosure, the tribunal shall be entitled to draw such inferences as it considers appropriate when determining the substance of the dispute or any award of costs or other relief. 49 Future developments in electronic disclosure Unsurprisingly, the techniques and tools for managing the storage and recovery of electronic data continue to evolve. Improved software tools for identifying potentially relevant documents by search characteristics and concept software tools for arranging documents for more efficient attorney review (normally the largest cost item in giving disclosure) continue to develop. Under pressure from litigation and regulatory investigation requirements, many businesses are already moving towards more efficient and centralised enterprise data management systems that will further enhance the speed, cost and efficiency of the identification and recovery of electronic data. The above developments will make it less onerous and burdensome for a party to produce requested relevant and material electronic documents as these enhancements are implemented. These improvements, as they occur, should therefore be factored into the decision of the arbitral tribunal when applying the balancing considerations described above, including due consideration of fairness and equality of treatment where there is an imbalance between the parties in terms of the ability to disclose documents. Nevertheless, the ongoing developments in electronic data storage do not all tend towards quicker, cheaper and more efficient recovery of electronic data. The trend towards storage of data on platforms maintained by outside providers (such as Microsoft, Yahoo and Google), which is sometimes referred to as the Cloud, may increase the complexity of data retrieval. Users may not have control over, or even knowledge of, the IT that supports them. Forms of electronic communication, such as the increasingly popular Twitter, and the particular dynamics and complexities 48 Ibid, at Ibid, at 14.

18 168 Dispute Resolution International Vol 3 No 2 October 2009 that such instantaneous and fragmented communications generate, may give rise to particular challenges in the context of evidential issues in commercial disputes. The need to monitor these ongoing developments for the purpose of keeping guidelines and protocols on electronic disclosure up-to-date is demonstrated by the example of back-up tapes (referred to above). It is currently a generally accepted principle in both litigation and in arbitration that [i]n the absence of particular justification it will normally not be appropriate to order the restoration of back-up tapes; erased, damaged or fragmented data; archived data or data routinely deleted in the normal course of business operations. 50 This reflects the onerous time and costs normally associated with retrieving and restoring data that is stored on back-up tapes. However, recent developments have considerably improved the accessibility of data stored on back-up media that previously might have been considered unattainable. Restoration of data in non-native formats allows for the restoration of data (including metadata) outside of its originating application, even if the owner of the data cannot find the original software versions under which the data was stored. To the extent that the restoration of back-up tapes is becoming cheaper and more efficient, it will be appropriate to take this into account in deciding whether the restoration of data from back-up tapes is reasonable and proportionate, in all the circumstances of the case. Without having to become IT experts, international arbitrators and counsel will be required to have an increasing awareness of the practical considerations that arise in the disclosure of electronic disclosure in international arbitration, in those cases in which it is an issue. Counsel for the parties have an important role in assisting the tribunal. Parties are entitled to expect that arbitral tribunals will address these issues in an informed and constructive manner, and this may affect the parties choice of arbitrator(s). Guidelines, protocols or institutional rule changes can act as a useful prompt for those less familiar with the issues that may arise in the disclosure of electronically stored information, in those cases in which they arise for consideration. 50 Ibid, at 7; see also Sedona Principle 8.