International arbitration offers a neutral forum for resolving disputes between parties from different jurisdictions. It is common for parties, their counsel, and the tribunal to come from different jurisdictions, with the seat of the arbitration often differing from the substantive law governing the dispute.
While the international nature of arbitration is a key advantage, it also introduces complex challenges. One common challenge arises during document production: whose rules of privilege should apply?
By Christophe Seraglini, Patrick Schroeder, Hinda Rabkin, Guy MacInnes-Manby and Katherine Khan
Privilege issues typically emerge during the document production phase. The applicable privilege rules can be key to how the document production exercise is undertaken. Privilege protects documents that a party would otherwise have to disclose. Incorrect application of privilege by arbitral tribunals may jeopardize the integrity of the award.
With arbitrations arising out of increasingly complex contracts and transactions involving parties, lawyers and arbitrators coming from across the globe, legal privilege can lead to lengthy debates at key phases in the proceedings. Acknowledging the existence of conflicting rules and addressing them early can only help to save time and money and ensure the smooth running of an arbitration for all of those involved.
Christophe Seraglini
Partner
Various jurisdictions can take very different approaches to what constitutes privileged information. A common example is the treatment of communications involving in-house lawyers. In common law jurisdictions like England & Wales and New York, and certain civil law jurisdictions like Brazil and Spain, privilege extends to these communications. Conversely, civil law jurisdictions like France and Germany do not recognize such privilege.
Most arbitration rules are silent on the issue of privilege, with notable exception, perhaps unsurprisingly, of the International Centre for Dispute Resolution (ICDR) Rules, the international arm of the American Arbitration Association. The parties can agree at the outset on which rules of privilege will apply, but this rarely happens in practice. As a result, privilege issues may give rise to extensive procedural debates during the arbitration. Such disputes can disrupt the proceedings and increase costs, requiring the tribunal to intervene and resolve the matter.
Until the IBA guidelines on privilege are published, varying approaches to privilege will continue to be debated and applied in international arbitration. Tribunals may resort to the current IBA Rules on the Taking of Evidence, though their guidance on privilege is limited. Parties should recognize that privilege in international arbitration may differ significantly from their expectations, in particular if parties are used to common law practices. In some cases, privilege may be significantly different or almost non-existent.
To enhance certainty, parties and tribunals could consider addressing privilege issues early in the proceedings (for example, in Procedural Order No. 1) to prevent disputes from arising during the document production phase.
Our global arbitration network is uniquely positioned to advise on privilege across diverse jurisdictions. We can assist proactively, helping you identify which communications will be protected by privilege.
