Civil and Common Law: Contrast and Synthesis in International Arbitration
Laeuchli, Urs Martin, Dispute Resolution Journal
An international practitioner with experience arbitrating in common law and civil law regimes discusses the differences between the two systems and how the best of both are being used to improve the efficiency of international arbitration.
This article examines the two main legal systems in the world-the civil law and the common law-and their impact on international arbitration. The majority of the world's population lives under the civil law, but the influence of the common law is significant. Before becoming an international arbitrator, I practiced law in both civil and common law jurisdictions so this article contains personal and academic reflections.
History and Substantive Differences
The civil law system is steeped in Roman law, which eventually led to the Napoleonic Code, the foundation of French law. The civil law spread to the rest of continental Europe, Russia, China, most of Asia, Latin America, and part of Africa. The common law system is the Anglo-American legal tradition based on English law.1 It spread to the United States, Canada, India, Australia and the rest of the British Commonwealth.
The common and civil law differ in numerous ways apart from arbitration procedure. For example, the common law requires consideration to form a contract; the civil law allows gift contracts; the common law doctrine of res judicata is broader than its civil law equivalent; and the common law allows extra-contractual punitive damages. We now turn to procedural differences and their effects on international arbitration.
Adversarial or Inquisitorial Approach. In general, common law jurisdictions take an adversarial approach to litigation and arbitration. Judges and arbitral tribunals play the role of impartial finder of fact and law in the adversarial battle between the parties.
Civil law jurisdictions use the inquisitorial method. Judges and arbitral tribunals actively elicit the facts and law from counsel and witnesses. In arbitration, this means that the tribunal is in complete charge of questioning witnesses. A party or counsel who wants to question a witness must present the question to the tribunal, which then questions the witness.
But these differences can be altered by legislation or arbitral rules. The English Arbitration Act (1996) and China's International Economic and Trade Arbitration Commission (CIETAC)2 both allow a tribunal to proceed in an adversarial or inquisitorial manner. In Switzerland, a civil law jurisdiction, parties in international arbitration have the right to be heard in an adversary proceeding.3 Thus attorneys may question the witnesses in those jurisdictions.
Julian Lew, a well-known international arbitrator and author, has pointed out that the personality of arbitrators, particularly that of the chair of the tribunal, can also influence the style of an international arbitration.4 This is particularly so in ad hoc arbitration (where the arbitration procedures are determined solely by the parties) and in the inquisitorial style of arbitration.
Pleadings. In common law countries, a pleading is a brief pre-hearing statement of a claim or defense, possibly combined with a counterclaim.
In a civil law regime, pleadings mean the lengthy oral presentations the parties' counsel make during the hearing. These include the case-in-chief, the rebuttal, and the reply and rejoinder. The pleadings are usually read from written papers called "memorials," which have exhibits attached. The exhibits are considered evidence in the case.
The nature of streamlined pleadings in common law regimes leads to a deeper issue: access to justice in civil law countries. Civil law jurisdictions require the parties to provide substantial evidence at the outset of a case before a claim is heard. This has led to criticism that they discriminate against parties who either do not have this evidence initially or cannot afford attorneys to assist them.
Discovery. Discovery is a key feature in pre-trial litigation in common law countries. Each party can compel the other side to produce relevant documents or other physical evidence, answer written interrogatories, make admissions, testify at a pretrial deposition, and allow site inspections. The common law authorizes exceedingly broad discovery and is therefore notorious for what are frequently characterized as "fishing expeditions." Sometimes attorneys who practice in common law countries use discovery tactics to exhaust or burden their adversaries.
In contrast, civil law jurisdictions do not allow discovery. Each party has the burden of proving its own case and the opposing party should not be forced to incriminate itself or assist in the case against it.5
If the civil law does not recognize discovery, how can documentary evidence be obtained? In an arbitration proceeding, a party must demonstrate to the tribunal that the document is material to its claim or defense, that it does not possess the document or a copy, and that the document is in the adversary's possession. In the case In Re: Technostroyexport, a New York federal court denied a petition to obtain discovery where the petitioner, a claimant in an arbitration in Sweden, failed to first obtain a ruling from the tribunal on discovery.6
In international arbitration, discovery may be authorized by the arbitration agreement, the applicable arbitration rules, or the subsequent agreement of the parties. Arbitrators also sometimes have discretion in managing this process.
In many cases, however, the parties choose to arbitrate precisely to avoid the open-ended and costly discovery allowed in common law litigation.
Documentary Evidence. Common law jurisdictions require documentary evidence to be introduced by counsel and authenticated and explained by a witness. This can be a costly process because a live witness must testify about each document a party wishes to introduce.
In civil law jurisdictions, written documents do not have to be individually entered into evidence; they are simply admitted by being attached to counsel's memorials. The reason is that under the civil law, documentary evidence is selfauthenticating. This makes introducing evidence less burdensome.
Presenting Witness Testimony. Civil law jurisdictions have a positive bias towards written evidence. They even allow written witness statements instead of live direct examination.
Common law jurisdictions have begun to use written witness statements because they are more efficient than direct examination. Parties may agree in an arbitration to use such statements; however, the witness is usually required to be available for cross-examination. Critics of written witness statements say that preparing the statement is as time-consuming as preparing a witness.
Common law jurisdictions test the credibility of witnesses through cross-examination. The civil law inquisitorial approach generally does not allow for cross-examination of witnesses. Thus, a witness's involvement in a case may be very brief.
Today the trend is to allow cross-examination in international arbitration when both civil law and common law attorneys participate. This is the legacy of the longest international arbitration, the Iran-U.S. Claims Tribunal.7 When counsel for the U.S. claimants asked the panel whether there would be cross-examination, the panel allowed counsel to present the tribunal with a question to ask the witness. When counsel again asked the tribunal to ask a question of the witness, the panel agreed. The third time, counsel did not ask the panel. Instead he gingerly tried to question the witness directly. As the tribunal looked on, a mild form of cross-examination evolved that was acceptable to all sides.8
Party Testimony. In civil jurisdictions, representatives of the parties do not typically testify because of their interest in the outcome. This is not usually the case in common law litigation of commercial disputes.
Expert Witnesses. In civil jurisdictions, the tribunal, not the parties, has authority to retain an expert witness to provide advice. This approach benefits parties with fewer resources. The presence of a star expert does not depend on whether a party can afford the expert's fee.
In general, in common law countries other than the U.K., the tribunal does not have authority to retain an expert. The parties hire their own experts or jointly hire one. The tribunal then decides between the competing experts' theories.
The common law approach has come under criticism for a number of reasons. First, the experts are not there to assist the tribunal. When each side retains an expert, the experts are partial to the retaining party. Second, the qualifications for an expert are not very high (except that in the United States, Rule 702 of the U.S. Federal Rules of Evidence sets limits on who may testify as an expert in court9). Third, modern litigators tend to over-use experts.10 Examples of overuse include coaching experts to be advocates, not independent scientists, and hiring redundant experts in an effort to outspend the opposition.
Application of the Law. In the civil law tradition, the tribunal determines and applies the correct rules of law. For this reason, parties need not be concerned as much about omitting critical legal arguments.
In the common law, it is the duty of counsel to allege and prove the facts, and to present all relevant legal arguments. An omission by counsel of a legal theory or case could lead the tribunal to overlook applicable law. Under some circumstances, it could lead to a malpractice action against the attorney.
Thus, in an international arbitration in a common law jurisdiction, counsel should become familiar with international usage, such as "incoterms" and lex mercatoria, which, in general, are sources of international law. Also, when the tribunal must determine what sources to consider in applying foreign law, it might wish to consider the flexible approach of Rule 44(1) of the U.S. Federal Rules of Civil Procedure. Under this rule, the party who wishes foreign law to apply first gives notice that foreign law is applicable. Then the court may consider any relevant source to determine that foreign law, including party-submitted testimony.
Differences in Record Keeping. In civil law jurisdictions, the tribunal sometimes records the proceedings, like the public courts. A legal clerk, often a young associate, writes the record, which includes a summary of all witness statements. Then the record is reviewed by the parties, the appropriate witnesses, counsel, and the arbitrators, all of whom have an opportunity to comment on the draft record. Three days of proceedings might produce less than 20 pages of record.
In common law jurisdictions, a written record of the proceedings is not required. If the parties agree or one party offers to pay for a court reporter, they can have a verbatim record of the proceedings.11
Costs. In common law proceedings, the parties typically pay their own attorney fees and arbitration costs are divided equally unless an agreement contains a fee-shifting clause providing for the loser to pay all costs. In civil jurisdictions and the U.K., costs and attorneys fees are awarded by the tribunal to the prevailing party. This could mean many millions in legal fees and costs in addition to the basic award.
Confidentiality or Privacy. Some common law jurisdictions, for example, the U.K. and Malaysia,12 recognize the confidentiality of arbitration. Others, like Australia and the United States, have rejected the concept that arbitration is subject to a confidentiality privilege.13 Nevertheless, arbitration proceedings between private parties are private proceedings, not open to the public, as are court proceedings.14
To ensure greater privacy, parties have the ability to enter into a confidentiality agreement in which they agree to keep the existence of the proceeding, all documents and communications related to the arbitration, and the award private. They could also enter into confidentiality agreements with witnesses. However, confidentiality agreements can be breached.
In China, arbitration hearings are confidential. According to the arbitration rules of the Beijing Arbitration Commission, meetings and hearings shall be conducted in private, unless both parties agree otherwise.15 Under the CIETAC rules, the tribunal may hold a hearing in camera even though the parties both request an open hearing.16
In some civil law countries, confidentiality may include keeping everything pertaining to the arbitration confidential, including the existence of the arbitration itself, dissents within the panel, arbitral orders and the award. For example, Sweden and France recognize the confidentiality of arbitration.
Synthesizing Common and Civil Law Systems
It is possible to synthesize the many positive features of the common and civil law and use them in international arbitration to the satisfaction of parties from different jurisdictions. This is most evident when the parties select arbitrators from civil and common law countries, so the panel is neither civil nor common law in orientation, but a hybrid. As Prof. Hans Smit has stated, there is a "marriage" of civil and common law in contemporary international arbitration.17
The international arbitration rules of the major institutional arbitration providers reflect this synthesis.
Discovery. Both the International Arbitration Rules of the International Centre for Dispute Resolution (a division of the American Arbitration Association) (ICDR rules) and the International Bar Association Rules on the Taking of Evidence in International Arbitration (IBA Rules) give the tribunal a strong position with regard to managing the arbitration process. Neither uses the term "discovery." The ICDR rules authorize the parties to exchange documents but do not mention depositions. The IBA rules similarly authorize the arbitrators to order production of documents that are in the possession or control of the parties. 18 Article 3 of the IBA rules provides detailed guidance on document production. This article is considered to be a "well-balanced compromise"19 between common law and civil law countries on the production of internal documents by an opposing party.
Rule 22.1 of the International Arbitration Rules of the London Court of International Arbitration, in subsection (d) and (e), gives the tribunal authority "to order any party to make any property, site or thing under its control ... available for inspection" by the other party and to "order any party to produce documents or classes of documents in their possession which the tribunal determines to be relevant."
Although civil law countries are generally more reluctant to enforce discovery orders, national law in the most popular international arbitration venues generally do.20
Witnesses. In arbitrations administered by the ICDR, the tribunal has the power to determine the manner in which witnesses are examined. 21 In a nod to the civil law, the rules also provide that the tribunal may retain independent experts.
The IBA Rules come down heavily on the civil side, giving the tribunal full control of the process surrounding witnesses. The IBA provides separately for party-appointed and tribunalappointed experts.22 An "expert summit" leads often to agreement on a substantial number of points and thus limits the testimony to be given at the hearing.23
Although the civil and common law systems represent fundamentally contrasting approaches to dispute resolution, counsel, arbitrators and arbitration providers are blending these approaches in international arbitration in order to expedite and better serve the parties to the proceedings. The results could be the best of both systems, taming the common law tendency toward over-litigiousness by greater tribunal control, providing broader access to a fair process than in some civil law jurisdictions, and providing an overall more cost-effective process.
In the civil law tradition, the tribunal determines and applies the correct rules of law. For this reason, parties need not be concerned as much about omitting critical legal arguments.
Some common law jurisdictions, for example, the U.K. and Malaysia, recognize the confidentiality of arbitration, but others, like Australia and the United States, do not.
1 Glossary or Arbitration and ADR Terms and Abbreviations 13 (Pierre Karrer, ed., Association Suisse de L'arbitrage (ASA) Special Series No. 27, Aug. 2006).
2 1996 English Arbitration Act 34(2)(g); CIETAC Arbitration Rules, art. 29.3.
3 Swiss Federal Act on Private International Law (PILA), art. 182.3.
4 Julian D.M. Lew, Inquisitorial v. Adversarial Proceedings 174 (ASA Special Series No. 26, July 2006).
5 Bernardo M. Cremades, "Managing Discovery in International Arbitration," 57(4) Dispute Resol. J. 2 (Nov. 2002-Jan. 2003).
6 853 F. Supp. 695 (S.D.N.Y. 1994).
7 How this epic endeavor, with its over 800 awards and decisions (including 83 interlocutory and interim awards) resolving about 3,000 cases, contributed to international arbitration may be seen in Christopher Drahozal et al., The Iran-U.S. Claims Tribunal at 25: The Cases Everyone Needs to Know for Investor-State & International Arbitration (Oxford Univ. Press 2007).
8 See the account given by Robert B. Davidson, Procedures in International Arbitration, a paper presented at the ABA Dispute Resolution conference, "International Arbitration & The Shrinking World," held in New York in 2004.
9 The Federal Rules of Evidence require a witness to be "qualified as an expert by knowledge, skill, experience, training, or education" in order to testify in the form of an opinion "if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case."
10 Robert Shaughnessy, "Dirty Little Secrets of Expert Testimony," 33(2) ABA Litig. J. (Winter 2007).
11 Andreas F. Lowenfeld, "The Two-Way Mirror: International Arbitration as Comparative Procedure," 7 Mich. YBI Legal Stud., 163, 167 (1985).
12 Rule 9 of the Rules for Arbitration of the Kuala Lumpur Regional Centre for Arbitration.
13 See Esso Australia Resources Ltd. & Others v. Plowman, 183 C.L.R. 10, 128 A.L.R. 391 (1995); United States v. Panhandle Eastern Corp., 118 F.R.D. 346 (D. Del. 1988).
14 Article 34 of the International Arbitration Rules of the International Centre for Dispute Resolution (ICDR), a division of the American Arbitration Association, calls for the arbitrator and the administrator to maintain the confidentiality of arbitration proceedings and the award.
15 Beijing Arbitration Commission Arbitration Rules, art. 24.
16 CIETAC rules, art. 33.1. See also art. 33.2 concerning the broad scope of arbitration confidentiality.
17 Hans Smit, "Roles of the Arbitral Tribunal in Civil Law and Common Law Systems with Respect to Presentation of Evidence," International Council for Commercial Arbitration Congress 162, 165 (Series 7 Nov. 1994, Kluwer, 1996).
18 W. Laurence Craig et al., International Chamber of Commerce Arbitration 449 (3d ed., Oceana 1998).
19 Hilmar Raeschke-Kessler, "The Production of Documents in International Arbitration: A Commentary on Article 3 of the New IBA Rules of Evidence," 18 (4) Arbitration Int'l, 411, 416 (LCIA 2002).
20 Grant Hanessian, "Discovery in International Arbitration," GPSolo (Sept. 2005) available at www.abanet. org/genpractice/magazine/2005/sep/discoveryintl.html.
21 ICDR rules, art. 20(4).
22 IBA Rules, Article 5.
23 D. Rivkin et al., "Trends in U.S. and International Arbitration," in Arbitration Rev. of the Americas 2007, 4 (Global Arbitration Rev. Special Report of the IBA, London, Nov. 2006).
BY URS MARTIN LAEUCHLI
The author, an international arbitrator, mediator and consultant, is admitted to practice law in Zurich (Switzerland), New York and California. He resides in San Francisco. His email address is firstname.lastname@example.org.…
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Publication information: Article title: Civil and Common Law: Contrast and Synthesis in International Arbitration. Contributors: Laeuchli, Urs Martin - Author. Magazine title: Dispute Resolution Journal. Volume: 62. Issue: 3 Publication date: August-October 2007. Page number: 81+. © American Arbitration Association Nov 2008-Jan 2009. Provided by ProQuest LLC. All Rights Reserved.
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