Witness evidence in arbitration: the impact of Practice Direction 57AC

There has been increasing discussion around what the impact of PD 57AC may be in the context of arbitration, without a consensus yet being reached. In this article, we look at the suitability of rules akin to PD 57AC being introduced into arbitration and the wider impact PD 57AC may have.

Is there a problem to fix?

Witness evidence is a key source of information for the arbitral tribunal to establish the facts on which it will determine the issues in dispute. The typical practice in arbitration is for witness statements to be provided, as in English litigation.  

There has been increasing criticism of witness evidence in arbitration. The degree of counsel involvement in the preparation of the evidence has led to concerns regarding how accurate a reflection the statement is of the witness’s actual memory of the event. Concerns have also been raised surrounding the increased time and costs involved to cover lengthy preparation of the statements and time spent by the arbitral tribunal dealing with witness evidence.

Specific criticisms arise in the context of international arbitration, where we see the common law and civil law approaches coming together. There are concerns around the potential for parties from different legal backgrounds to play by different rules in the preparation of their witness evidence, therefore creating an uneven playing field.

The divergence of approaches to witness evidence is amplified because of the system of rules and laws which apply to arbitration. There is not one set of compulsory rules similar to PD 57AC applicable to all arbitrations, which some have criticised for leading to an absence of a predictable and uniform approach.  

Existing arbitration rules and guidelines

Existing institutional rules and guidelines do provide some guidance on the preparation of witness evidence. The 2020 LCIA Rules and UNCITRAL Rules provide that witness evidence can be in written form, and the 2021 ICC Rules suggest that in order to control time and cost the arbitral tribunal can limit the length and scope of written submission to focus on the key issues.

To date, the only institution to adopt a similar approach to PD 57AC is the LMAA in its 2021 terms, which set out prescriptive rules regarding the content and form of witness statements.

The instrument which has had the most influence on the preparation of witness statements is the 2020 IBA Rules on Taking of Evidence in International Arbitration (IBA Rules). The best practice that is generally adopted in line with the IBA Rules is that: (1) witness statements contain the words actually used by the witness relating to the events; (2) which the witness has direct knowledge of; and (3) without the witness’s comment on every document produced in the matter.

Arbitrators tend to adopt the IBA Rules even in the absence of the parties’ express agreement in order to supplement the provisions of any applicable institutional rules. This is reflective of the fact that the arbitration community views the IBA Rules as a harmonised approach between the common and civil law backgrounds.  

Suitability of PD 57AC rules in arbitration

Our view is that rules akin to PD 57AC are not necessary in arbitration. The criticisms levied against witness evidence in arbitration is more focussed on the need to improve the quality of witness evidence and ensure both parties have prepared their evidence on the same terms. Rules relating to a certificate of compliance will not achieve this aim.

If PD 57AC rules were introduced into arbitration, there would likely be more time and cost incurred dealing with opportunistic challenges not only during the proceedings themselves but challenges to awards as well with parties arguing there are serious irregularities in the way a tribunal dealt with the evidence.

There would arguably be a higher chance of non-compliance in arbitration given that some parties will have a civil law background and so be even less familiar with strict requirements influenced by the common law approach. The broad and flexible institutional and IBA Rules provide the room necessary for parties from different legal backgrounds to prepare their witness evidence and provide witness statements that reflect a compromise between the common and civil law approaches.

Maintaining this flexibility is key. One of the main reasons commercial parties submit their disputes to arbitration is because it allows the parties to shape how their dispute resolution method will operate. Introducing another set of rules with the level of prescription we see in PD 57AC will risk making arbitration as regimented and complicated as court proceedings.

Looking forward…

Whilst it is undesirable to introduce PD 57AC rules into arbitration, it is unavoidable that the law of the seat will influence the arbitral process. It is in this way that we may see PD 57AC indirectly influencing arbitration.

If parties to an arbitration with a London seat want to avoid the other party successfully challenging the award on the basis that the witness evidence in the case meant they did not have a fair opportunity to present its case, parties may be minded to prepare their witness statements in accordance with PD 57AC. Following the approach of the English courts in this way could reduce the chances of a successful challenge.

Aside from this though, the most appropriate way to address the criticism of witness evidence in arbitration is for the arbitral tribunal to harness current tools available. The arbitrator is independent and impartial and is therefore best positioned to find a compromise between a potential conflict of the common and civil law approaches and within the context of the particular dispute. A broad brush set of PD 57AC-type rules will not be able to achieve this nuance.

To combat the due process paranoia which restrains arbitrators’ use of available tools, the focus needs to be on promoting confidence in the tribunal to exercise its power conferred on it by the arbitration agreement. Parties should actively seek direction from their tribunal to ensure a consensus is reached on the preparation and treatment of witness evidence at an early stage in the arbitral process, to avoid satellite disputes arising further down the line.