International Arbitration Part 3 – Traps, Tricks, and Practice Pointers

Posted by Hecht Walker, P.C.
Posted on May 9, 2016


Evidentiary Issues

Prepare for the relaxation of evidentiary rules in ICC arbitrations. First, remember that hearsay will come in to most ICC arbitrations, but the arbitrator may determine what weight and credibility will be given to such hearsay. Second, motions to exclude such as Daubert motions are less likely to be granted than in a Court setting. In our opinion, arbitrators are more likely to include evidence than a district court or superior court judge would to avoid any confirmation issues related to exclusion of evidence.
Strategically, motions in limine and Daubert motions are still helpful for the arbitrator to determine weight and credibility issues. Furthermore, the motion in limine can result in the rare exclusion of evidence in an arbitration.

ICC Rules

Don’t expect to be operating under a Civil Procedure Act within the ICC arbitration process. The ICC provides some definite rules, but a lot of the procedure is going to be determined by the arbitrator and the parties. The parties and the arbitrator may provide for the federal or state rules to be the default set of rules when there is no guidance from the ICC.
In addition, be aware that certain affirmative defenses normally expected to be applied may not be applied in your case. For example, the statute of limitations defense may or may not be applied as you would expect in the arbitration process. You need to brace your client for the fact that certain affirmative defenses may not receive the same mandatory application in ICC arbitrations as those defenses would in a State or Federal Court case. The results of those decisions may increase the cost and breadth of the litigation within the arbitration process. Also, the arbitrator may not make decisions on such important issues until just before the evidentiary hearings (i.e., trial for all practical purposes).

Due Process of Law

ICC arbitrators do not want to be reversed or have their decisions fail to be confirmed. One significant type of objection or motion, if normal rules of procedure are not followed, is constitutional objections such as a failure to provide due process of law to the parties. If the arbitrator is not following standard civil procedure rules, then this type of motion or objection is an important tactic to utilize.

The Talk

If the case is not going to settle and will be tried in evidentiary hearings, then early in the proceedings, you need to haveTHE TALK with your client. You need to let the client know that the arbitration process can get very expensive including hundreds of thousands of dollars for prosecution or defense of a case, and that your client should not expect a significantly reduced cost to arbitrate the case over litigating a case under a Civil Procedure Act and in Court. This talk will assist clients and will assist your firm before legal costs get out of hand based on the misperception of clients in relation to arbitration being much cheaper than normal litigation.
Conducting THE TALK before engaging in significant discovery is important, because the pace at which ICC arbitration runs is brisk. Once written discovery begins, the calendar will be compressed significantly in comparison to normal litigation.
The amount of documents and the translations needed for written discovery are significant and on deadlines that may or may not be realistic. Both parties will encounter these difficulties and need to be cooperative with opposing counsel. Both parties need to work with the Arbitrator on realistic deadlines to complete discovery, pre-trial motions, and evidentiary hearings.
Also you should note to your client that once depositions begin, the costs and fees will rise dramatically during those months. The timeline is shorter in general than regular litigation, and as a result, the cost and fees will be intense within each month as depositions go forward. You need to prepare your client accordingly.
Also, please note that each arbitrator may handle the discovery process differently. Some arbitrators may limited depositions significantly and push for memorial statements and affidavits as opposed to many depositions. This decision will significantly affect the cost and strategy related to the arbitration.

Subpoena Frustrations

The ability to enforce subpoenas in ICC arbitrations is difficult and cumbersome. Out of state subpoenas, to be enforced, require holding hearings out of state where the witness resides. You would be asking the arbitrator to hold the hearing out of state with the parties counsel. Questions as to the utilization of skype and other such services by the out of state witness counsel are all subject to interpretation and in the end, likely require a court ruling if the out of state witness’s counsel objects or just ignores the subpoena. We can assist you on this issue, but it is very difficult to gain compliance. Some collateral source articles exist on these out of state subpoena enforceability issues.

Evidentiary Hearings

Time is tight in evidentiary hearings. An ICC arbitrator may decide that the arbitration will take a maximum of five (5) business days regardless of the number of documents, depositions, and experts you maintain. Deposition designations, i.e. page and line number demarcations for use of depositions as testimony, may be necessary by stipulation in order to complete evidentiary hearings within the time allotted by the arbitrator. Specific rulings on the use of depositions and affidavits are critical, and the strategic evaluation of such utilization of live and deposition witnesses are critical from the beginning. Also, you should get an idea of the weight affidavits and deposition designations will get from your arbitrator before evidentiary hearings begin.
Pretrial Briefs and Opening Statements are critical. Do not assume that your arbitrator will find the right passages in depositions. Both sides need to be cognizant of the potential need to designate deposition portions for trial.
During the evidentiary hearings, do not expect normal court procedures. In fact, don’t be surprised if the arbitrator engages in significant questioning of the witnesses to your clients advantage and disadvantage at times.
Furthermore, do not expect normal objections to be sustained. Most of the time, the evidence is going to come into the proceeding. Unless exhibits have not been provided previously in discovery, the exhibits are likely to be admitted into the proceeding. Hearsay and other objections will be rarely sustained if a bates stamp number is on the document or prior notice has been received by the opposing party.
A lack of hard and fast rules in ICC arbitration exists for the most part. The best of trial lawyers can be rewarded or frustrated by this lack of formality. However, it is better to be forewarned than to be surprised at these hearings.

Hecht Walker, PC Arbitration Representation

Our firm wishes you the best of luck in your ICC arbitrations. If we can assist you in arbitration or in litigation, we would be honored to serve.  Please feel free to contact us about your international or domestic arbitration, commercial litigation, real estate litigation, employment law litigation, and business disputes of all kinds. Thank you.
Greg Hecht has been a practicing attorney for 28 years. He has been lead counsel in over 1000 hearings and 300 trials. His specialties include international arbitration, business, commercial and real estate litigation, local government law, commercial landlord/tenant, contract, 42 USC 1983, zoning, land use, employment law, personal injury & wrongful death, and litigation.

Greg-Hecht-v2-thumbnail

Greg Hecht has been a practicing attorney for 28 years. He has been lead counsel in over 1000 hearings and 300 trials. His specialties include international arbitration, business, commercial and real estate litigation, local government law, commercial landlord/tenant, contract, 42 USC 1983, zoning, land use, employment law, personal injury & wrongful death, and litigation.

Full bio at https://www.hechtwalker.com/about/attorneys/greg-k-hecht/

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