Latest News
Navigating Evidence and Discovery in Indian Arbitration: A Comprehensive Guide
Introduction
Arbitration is a popular method of resolving commercial disputes in India, as it offers the parties flexibility, confidentiality, and efficiency. However, one of the challenges that parties often face in arbitration is the production and examination of evidence, especially when the evidence is in the possession of the opposite party or a third party. In this article, we will discuss the types of evidence and discovery in Indian arbitration, the legal framework and emerging trends that govern them, as well as the challenges posed therein.
Types of Evidence in Indian Arbitration
Evidence in arbitration can be broadly classified into two categories: documentary evidence and oral evidence. Documentary evidence refers to any written or electronic material supporting the parties' claims or defences, such as contracts, invoices, emails, reports, etc. Oral evidence refers to any testimony given by witnesses, either factual or expert, before the arbitral tribunal.
Documentary Evidence
Documentary evidence is usually submitted by the parties along with their pleadings, or at any later stage as directed by the arbitral tribunal. The parties are expected to disclose all the relevant and material documents that they rely on or intend to rely on in the arbitration. However, if a party needs to obtain a document that is in the custody or control of the other party or a third party, it can request its production through a process known as discovery.
Discovery
Discovery is a procedure that allows a party to seek access to documents or information that are not in its possession but are relevant and material to the dispute. Discovery can be sought from the other party (party discovery) or from a non-party (third-party discovery). Discovery can be of two types: discovery of documents and discovery by interrogatories.
Discovery of Documents
Discovery of documents is where one party compels the other party or a third party to produce the documents that they are relying on or have referred to in their pleadings or evidence. Discovery of documents can be done through requests for production of documents, which are usually based on the Redfern Schedule.[1] The Redfern Schedule is a collaborative document that both parties and the arbitral tribunal use for the production of documents. It contains four columns: (i) a description of each document or category of documents requested; (ii) reasons for its relevance and materiality; (iii) objections raised by the other party; and (iv) decision of the arbitral tribunal.
The arbitral tribunal has wide discretion to order discovery of documents under Section 19(2) of the Arbitration and Conciliation Act, 1996 (the Act), which provides that "the arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872". The Andhra Pradesh High Court has also affirmed this principle in Hindustan Shipyard Limited Vs. Essar Oil Limited and Ors., AIR 2014 AP 13, where it held that the arbitral tribunal has to weigh the entire evidence on record properly and come to a just conclusion within the parameters of the dispute. The arbitral tribunal may also seek assistance from the court under Section 27(2)(c) of the Act, which empowers the court to order any person to produce before the arbitral tribunal any document in his possession.[2]
However, the discovery of documents in Indian arbitration is not as extensive as in common law jurisdictions like the US or UK, where parties can seek disclosure of any document that is reasonably calculated to lead to admissible evidence. In India, the discovery of documents is subject to certain limitations, such as:[3]
- Relevance and materiality: The document requested must be relevant to the issues in dispute and material to its outcome. The relevance and materiality criteria are determined by the arbitral tribunal based on its assessment of the case.
- Proportionality: The document requested must not be disproportionate to its probative value or importance. The arbitral tribunal may consider factors such as cost, time, confidentiality, privilege, etc. while ordering the discovery of documents.
- Specificity: The document requested must be identified with sufficient specificity and not be vague or overbroad. The arbitral tribunal may reject requests for the production of entire categories of documents or fishing expeditions.
- Availability: The document requested must be in the possession, custody or control of the party or person from whom it is sought. The arbitral tribunal may not order discovery of documents that are not reasonably accessible or obtainable.
Discovery by Interrogatories
Discovery by interrogatories is when one party asks questions to the other party or a third party regarding facts or matters that are relevant and material to the dispute. Discovery by interrogatories can be done through written questions that are submitted to and answered by the other party or person under oath.
The arbitral tribunal has similar discretion to order discovery by interrogatories under Section 19(2) and Section 27(2)(c) of the Act. However, discovery by interrogatories in Indian arbitration is also subject to certain limitations, such as:
- Relevance and materiality: The questions asked must be relevant to the issues in dispute and material to its outcome. The relevance and materiality criteria are determined by the arbitral tribunal based on its assessment of the case.
- Proportionality: The questions asked must not be disproportionate to their probative value or importance. The arbitral tribunal may consider factors such as cost, time, confidentiality, privilege, etc. while ordering discovery by interrogatories.
- Specificity: The questions asked must be clear and concise and not be vague or overbroad. The arbitral tribunal may reject irrelevant, immaterial, oppressive, or abusive questions.
- Necessity: The questions asked must not be such that the answers are already available or can be obtained from other sources. The arbitral tribunal may not order discovery by interrogatories that are unnecessary or duplicative.
Oral Evidence
Oral evidence is the testimony given by witnesses before the arbitral tribunal, either in person or through video conferencing or other means. Witnesses can be of two types: factual witnesses and expert witnesses. Factual witnesses are those who have personal knowledge of the facts or events related to the dispute. Expert witnesses are those who have specialized knowledge or skill in a particular field or subject matter relevant to the dispute.[4]
The examination of witnesses in Indian arbitration is generally done through the traditional court method of examination-in-chief, followed by cross-examination and re-examination. Examination-in-chief is where the witness gives his or her testimony in support of the party who has called him or her. Cross-examination is where the witness is questioned by the other party to test his or her credibility, reliability, and consistency. Re-examination is where the witness is questioned by the party who has called him or her to clarify any points that may have arisen during cross-examination.
However, the examination-in-chief is now being taken on affidavit to reduce time and avoid repetition. The affidavit of evidence contains the witness's statement along with the documents that he or she relies on. The affidavit of evidence is submitted to the arbitral tribunal and exchanged with the other party before the hearing. The witness is then cross-examined and re-examined at the hearing.
The arbitral tribunal has wide discretion to determine the admissibility, relevance, materiality, and weight of any evidence under Section 19(4) of the Act, which provides that "the arbitral tribunal shall determine the admissibility, relevance, materiality and weight of any evidence". The arbitral tribunal is not bound by the Indian Evidence Act, of 1872, which contains various rules and principles regarding evidence. However, the arbitral tribunal may refer to the Indian Evidence Act, 1872 as a guide or a persuasive authority while deciding on evidentiary matters.
Emerging Trends in Evidence and Discovery in Indian Arbitration
In recent years, some emerging trends have been observed in evidence and discovery in Indian arbitration, such as:
- Hot-tubbing: Hot-tubbing is a technique where expert witnesses from both sides are examined together by the arbitral tribunal and by each other in a discussion format. Hot-tubbing aims to facilitate a constructive dialogue between experts, identify areas of agreement and disagreement, and assist the arbitral tribunal in understanding complex technical issues.[5]
- E-discovery: E-discovery is the electronic discovery. It is the process of storing, compiling and securing data such as files, emails, documents, databases, bills, etc., for evidence in legal proceedings. E-discovery poses various challenges for parties and arbitrators in terms of cost, volume, confidentiality, preservation, etc., and requires special tools and techniques to manage it effectively.[6]
- Witness conferencing: Witness conferencing is a technique where factual witnesses from both sides are examined together by the arbitral tribunal and by each other in a discussion format. Witness conferencing aims to enable a direct comparison of factual evidence, highlight inconsistencies or contradictions, and assist the arbitral tribunal in assessing credibility and reliability.[7]
Challenges of evidence and discovery in Indian arbitration
Evidence and discovery are essential aspects of any arbitration proceeding, as they help the parties to establish their claims and defenses, and assist the arbitral tribunal to deliver a reasoned award. However, evidence and discovery also pose certain challenges, such as delays, costs, enforceability, and disclosure.
Delay in the Arbitral Process
One of the major challenges of evidence and discovery in Indian arbitration is the delay in the completion of the arbitration process. The parties often engage in lengthy and complex procedures for producing and examining evidence, which consume a lot of time and resources. Moreover, the parties may also resort to multiple applications and appeals before the courts, seeking or challenging the production of evidence or discovery of documents. This leads to further delays and interruptions in the arbitration proceedings. For instance, the average duration of an arbitration proceeding in India is about three years, which is much longer than the global average of one year.[8]
Procedural Costs
Another challenge of evidence and discovery in Indian arbitration is the cost involved in the process. The parties have to bear the expenses of producing and examining evidence, such as fees for experts, translators, witnesses, etc. The parties also have to pay for the legal fees and expenses of their counsel, who may charge high rates for handling complex evidentiary issues. Moreover, the parties may also incur additional costs for seeking or challenging the production of evidence or discovery of documents before the courts. These costs may deter some parties from opting for arbitration, especially if they have limited financial resources.
Enforceability of Arbitral Awards
A third challenge of evidence and discovery in Indian arbitration is the enforceability of arbitral awards. The parties may face difficulties in enforcing arbitral awards that are based on evidence or discovery that are not by the law or public policy of the country where enforcement is sought. For example, some countries may not recognize or enforce arbitral awards that are based on illegally obtained evidence, such as wiretaps, hacking, etc. Similarly, some countries may not recognize or enforce arbitral awards that are based on discovery that violates the privacy or confidentiality rights of the parties or third persons. Therefore, the parties have to be careful about the type and source of evidence or discovery that they rely on or produce in arbitration proceedings.
Disclosure of Information
A fourth challenge of evidence and discovery in Indian arbitration is the disclosure of information or documents that are relevant to the dispute. The parties may have different expectations and practices regarding the disclosure of information or documents in arbitration proceedings. Some parties may prefer a broad disclosure, while others may prefer a narrow and limited disclosure. Some parties may also have concerns about disclosing sensitive or confidential information or documents that may affect their business interests or reputation. Therefore, the parties have to balance their interests and obligations regarding the disclosure of information or documents in arbitration proceedings. The International Bar Association (IBA) has issued rules and guidelines regarding international arbitration evidence, which provide a framework for addressing disclosure issues. However, these rules and guidelines are not binding on the parties or the arbitral tribunal, unless they agree to adopt them.[9]
Conclusion
Evidence and discovery are crucial aspects of arbitration that can have a significant impact on
the outcome of the dispute. Parties and arbitrators should be aware of the types of evidence
and discovery in Indian arbitration, and the legal framework and emerging trends that govern
them. Parties and arbitrators should also strive to adopt best practices and innovative methods
to ensure that evidence and discovery are conducted in an efficient, fair, and proportionate
manner.
References
[1] Discovery In Arbitration - Arbitration & Dispute Resolution - India (mondaq.com)
[2] Silor Associates v. Bharat Heavy Electrical Limited, O.M.P. 1037/2013
[3] Union of India v. Reliance Industries Ltd. & Ors, Arb. A. (COMM.) 57/2018, 2019 (1) Arb LR 72 (Delhi), ("Delhi HC Judgment")
[4] Expert Evidence in Arbitration: Should India Dip Its Toes in the Hot-Tub? - IndiaCorpLaw
[5] Expert Evidence in Arbitration: Should India Dip Its Toes in the Hot-Tub? - IndiaCorpLaw
[6] Discovery In Arbitration - Arbitration & Dispute Resolution - India (mondaq.com)
[7] witness-conferencing-guidelines-draft-for-consultation.pdf (ciarb.org)
[8] Arbitration in India: A study of issues and challenges - LexForti
[9] International Bar Association (IBA) Rules on the Taking of Evidence in International Arbitration, 2020. Available at MediaHandler (ibanet.org)
- The article explores the intricacies of evidence and discovery in Indian arbitration, from types of evidence to the challenges posed by the legal framework.
- Discover the nuances of documentary and oral evidence, the role of expert witnesses, and the impact of emerging trends like hot-tubbing and e-discovery.
- Navigate challenges such as delays, procedural costs, enforceability concerns, and differing expectations in disclosure, gaining insights for a successful arbitration journey in India.
