iIn an era when companies from Boston are as likely to do business with Beijing as Baltimore, and a Seoul firm has regular commerce with Sao Paulo and Santiago, the means by which corporations and countries hammer out their disputes becomes an increasingly important part of their business calculations and profit and loss statements.
For decades, international arbitration has been the preferred forum for cross-border concerns. In the wake of significant global economic challenges—including shifts in the worldwide energy market and post-pandemic supply chain shortages—it remains the top method for resolving transnational disputes.
International Arbitration Gives Parties More Control
The overarching advantage of the arbitral environment is flexibility regarding procedure and method, allowing the disputing parties to retain more control than in traditional litigation. While each seat of arbitration has its own rules and guidelines, they are not generally mandatory, and the process is largely decided by agreement between the parties. Arbitration of cross-border disputes also offers neutrality as to governing law and geographic location and a neutral forum that does not give either party the advantage of their domestic court.1
In addition to this flexibility and neutrality, arbitration awards are widely enforceable in countries that are signatories to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention).2 As of January 2023, the New York Convention has 172 state parties (nations) as signatories, which includes 169 of 193 UN member countries.3 The five most common seats for arbitration are London, Singapore, Hong Kong, Paris, and Geneva, according to international law firm White and Case.4
The arbitrator selection process adds to the attraction of international arbitration. Parties may choose their own arbitrator, provided they meet the basic qualifications of the location where the proceeding will be heard. The ICC International Court of Arbitration maintains a public network of arbitrators that parties may use as a resource.5 The parties also determine how many arbitrators will hear a case. Most commonly, there is a sole arbitrator (agreed upon by the parties or chosen by the institution) or a three-person tribunal. For the latter, each party may pick one member; the third is chosen by agreement or the arbitral institution and usually functions as the presiding arbitrator. Three-person panels are preferred if the dispute is of significant value or complex in nature.
Experts Are Critical to Fill Gaps in Tribunal Knowledge
An arbitral tribunal must process complicated facts, technology, and science underlying the dispute, the outcome of which can have sensitive geopolitical ramifications. By nature of the parties included—nations and/or global companies—these disputes will likely involve large commercial contracts that require intricate financial determinations. With different languages, a litany of various laws, and differing cultural backgrounds, the need for expert witnesses is apparent.
Arbitrators are often chosen because they have expertise in the subject matter of the dispute or the substantive law involved in the contract. Still, complex matters may require even more specialization beyond that of the arbitrator(s). Expert evidence is often necessary to assist the tribunal in understanding complex or technical matters outside their specialty. Almost every business arbitration relies on expert testimony.6
Broadly, there are three categories of expert evidence presented in international arbitral proceedings: technical, legal, and financial. Technical experts address the tribunal’s need for information on the science and technology underlying the facts in the dispute. Legal expertise is necessary when the laws under which the dispute arose are unfamiliar to the tribunal members. The financial expert can shed light on the delay, costs, and losses of the problem or disruption attendant to the situation at issue.
Selecting Experts for International Arbitration
Either the arbitrating parties or the tribunal can identify and appoint an expert witness for an arbitration. While party-appointed experts are common, tribunal-appointed experts are preferred under certain procedural rules, and there are issues presented by each method of appointment.
PARTY-APPOINTED EXPERTS
In international arbitration, expert witnesses are usually identified and hired by the parties, as is the case in US courts. Each party remunerates their own expert fees and expenses.7
Occasionally, parties may jointly agree to appoint a single expert witness. This is obviously a rarity, as parties who have conflicting interests are unlikely to agree on a single expert’s report or point of view. Also, neither party will have a basis on which to challenge the expert opinion that is ultimately unfavorable to them.8 The award is essentially final in cases where the parties rely on a single expert.
A downside of using a party-appointed expert is that their impartiality may be questioned. They may be perceived as beholden to the one party who preps them and pays their fees.
TRIBUNAL-APPOINTED EXPERTS
While the former option is the norm, an arbitral tribunal may opt to appoint its own single expert to limit the expense and the difficulty of choosing between opposing views of party-appointed experts. Some arbitrators may choose to appoint their own expert in addition to the parties’ experts to resolve competing expert opinions, usually determined when the parties’ expert reports conflict.9 Fees and expenses of tribunal-appointed experts are added to the arbitrators’ expenses and shared by the parties.10
There is an obstacle here as well; arbitrating parties may distrust the expert chosen by the tribunal because the tribunal is seen as delegating its decision-making to the expert instead of coming to its own impartial and reasoned judgment. Excellent and unassailable testimony may overcome this objection, but truth is generally in the eye of the beholder.
EXPERT WITNESS RESPONSIBILITIES
Experts typically prepare a main expert report and a rebuttal report if needed. They can expect to testify at the final hearing to answer any questions the tribunal members may have and to be cross-examined by one or both parties’ counsel.
When multiple experts are selected by the two parties, they will typically present their reports sequentially at the same hearing, after which they will address questions from the arbitral tribunal and counsel in a parallel fashion. This practice, called witness conferencing or “hot tubbing” colloquially,11 originated in Australia and is gaining popularity in other major arbitration centers. In cases with a great quantity of technical evidence, this method facilitates the experts conversing, and arbitrators can ask questions and help resolve conflicting views in real-time, like a debate.
Witness conferencing is not a substitute for direct and cross-examination, but rather an addition to traditional testimony. Experts will be allowed to ask and answer follow-up questions and may ask each other to explain, clarify, or defend their respective positions.12 This method of approaching testimony is particularly helpful if there are several witnesses and testimony is disparate in time, such that the conventional approach of examining witnesses in a linear fashion is confusing.13
Expert Evidence Rules
Most arbitration centers have organically adopted their own governing rules, which are not strict regulations but more experience-based guidelines for parties to use selectively based on the issues and needs of their particular case. This development comes from the disparity among laws and jurisdictions; each center thus needs its own approach.
Emerging Trends in Expert Evidence
Construction, energy, aviation, aerospace, life sciences, and fintech—to name a few industries—have grown with new technology at breathtaking speed. Because of these advancements, many international arbitrations hinge on technology-related issues, and each new tech “trick” increases the demand for countless specialized experts in arbitration. This evolution is occurring alongside the procedural reviews that some arbitral centers are conducting in the post-pandemic environment.
The Global Working Group of the International Council of Dispute Resolution (ICDR), the international division of the American Arbitration Association (AAA), is currently undertaking a study that will include input from international practitioners. This study will likely shape how technology and IP disputes are handled in the international dispute resolution community.14 Because the Global Working Group’s goal is to encourage the use of international arbitration in these areas, it will be interesting to see what practice proposals result regarding the use of expert witnesses.
In general, there is a trend toward arbitral institutions improving the process of selecting experts and a focus on experts working collaboratively to streamline the evaluation of expert evidence. Institutions are focused on due process, ensuring witness impartiality and procedural expediency to save time and costs while using experts in arbitral proceedings.
References
1 “Flexibility: A Key Advantage of Arbitration (That Also Helps Promote Diversity and Green Procedures),” July 27, 2021. https://www.dentons.com/en/insights/articles/2021/july/27/flexibility-a-key-advantage-of-arbitration.
2 New York Convention. “The New York Convention » New York Convention,” n.d. https://www.newyorkconvention.org/.
3 Wikipedia contributors. “Convention on the Recognition and Enforcement of Foreign Arbitral Awards.” Wikipedia, January 18, 2023. https://en.wikipedia.org/wiki/Convention_on_the_Recognition_and_Enforcement_of_Foreign_Arbitral_Awards#:~:text= As%20of%20January%202023%2C%20the,not%20yet%20adopted%20the%20convention.
4 Smutny, Abby Cohen and Gallagher, Norah. Publication. 2021 International Arbitration Survey: Adapting Arbitration to a Changing World. White & Case, LLP, May 6, 2021. https://www.whitecase.com/insight-our-thinking/current-choices-and-future-adaptations.
5 https://iccwbo.org/dispute-resolution/dispute-resolution-services/arbitration/rules-procedure/2021-arbitration-rules/
6 Aceris Law, LLC. “Expert Evidence in International Arbitration.” ACERIS LAW, March 27, 2022. https://www.acerislaw.com/expert-evidence-in-international-arbitration/.
8 Chartered Institute of Arbitrators. https://www.ciarb.org/resources/guidelines-ethics/international-arbitration/
9 Ibid.
10 Ibid.
11 McAlpine, Alasdair. “Hot-Tubbing in International Arbitration: Do We Need a Protocol?” Arbitration Blog, May 1, 2018. http://arbitrationblog.practicallaw.com/hot-tubbing-in-international-arbitration-do-we-need-a-protocol/.
12 Dezaki, Sena Gbedemah Toshi. “How Hot-Tubbing Is Shifting the Expert Evidence Paradigm.” Passle, November 16, 2020. https://angle.ankura.com/post/102hbnr/how-hot-tubbing-is-shifting-the-expert-evidence-paradigm.
13 Jones, Doug. ”Methods for Presenting Expert Evidence.” Global Arbitration Review. September 3, 2021. https://globalarbitrationreview.com/guide/the-guide-evidence-in-international-arbitration/1st-edition/article/methods-presenting-expert-evidence#footnote-013.
14 ICDR Survey and Report | icdr.org. (n.d.). https://www.icdr.org/technology-and-life-science-disputes/survey-and-report
With contributions from IMS Industry Relations Manager Lisa Walters, IMS Presentation Manager Rebecca Ross, and Joshua Peck Legal Communications.
