Opting for arbitration: risks and opportunities regarding evidence
There are many good reasons to opt for arbitration as dispute resolution mechanism when negotiating a commercial contract. You have a one instance procedure circumventing the judicial backlog at the level of the Court of Appeal. You can make sure you have specialized arbitrators dedicating sufficient time to your case. The arbitral award has the same value as a court judgment and can easily be enforced in Belgium, and internationally via the New York Convention.
One of the characteristics of arbitration that is often overlooked are the different evidentiary techniques that can be applied, especially compared to what you may be used to in Belgian court proceedings. Arbitration indeed allows for a much more flexible regime to provide factual evidence.
We highlight two tools of which the application in arbitration (both domestic and international) is much different than before Belgian courts.
A. Witness evidence
While there is a possibility to ask the court to hear a witness in regular Belgian court proceedings, it is a cumbersome procedure which is rarely used. In addition, it is possible to file written witness statements, but lacking any specific procedure to cross-examine the witness, such statements will rarely provide the evidence that a party needs to convince the court of its position.
In arbitration proceedings witness evidence is however generally allowed and also frequently used as method of providing factual evidence. Although it is and remains a declaration made by one person which may not be independent from the party that presents it, the impact of such witness testimony should not be underestimated, in positive or negative way. Especially the possibility to actually hear and cross-examine the witness during the oral hearing proves to be a valuable addition to what the witness has written in the written statement. Where a written statement will not be filed without the party’s legal representatives’ approval, during the hearing the witness has to answer directly to the questions received by the arbitral tribunal or by the cross-examining counsel. If the witness has relevant factual evidence to bring, then such witness examination can often prove to be crucial.
B. Disclosure of documents
In regular court proceedings a party can ask the court to order the other party or a third party to produce a document if there are serious and concrete indications that this party is in possession of such document and that it will prove a relevant factual point. This possibility is strictly applied by courts and is basically limited to very specific documents of which you know they exist.
Arbitration proceedings provide a much broader possibility to organize document production. While it cannot be compared to US-style discovery, an arbitral tribunal typically has the possibility to order a party – on the request of another party – to provide certain categories of well-identified documents. This can for example be a category of e-mails or letters that were exchanged between that party and another party in a specific period of time. Arbitral tribunals will not allow for ‘fishing expeditions’ for evidence without clear link to the case at hand, but within those boundaries parties may sometimes be surprised that they are ordered to look for and provide certain documents they had no intention to provide voluntarily. This creates opportunities to get evidence from the other side that may not be obtained in regular court proceedings, but also entails a risk that you may yourself get obliged to provide information to the other side that may harm your case.
Not complying with orders from an arbitral tribunal entails the risk of the arbitral tribunal drawing adverse inferences from such non-compliance, such as concluding that a certain factual matter is proven.
Deciding whether to opt for an arbitration clause in a commercial contract therefore has certain consequences that a party may not immediately be aware of when concluding a contract. As always it is advisable to take all circumstances of the contract into account when deciding whether arbitration would be a good dispute resolution mechanism, which it will be in many cases.
If you have any questions on this, do not hesitate to contact us.