Arbitration - USA
Revised AAA commercial rules align with IBA rules
Author
Contributed by K&L Gates
JP Duffy
November 07 2013
Introduction
Document exchange under previous AAA commercial rules
Revisions to document production standards under new rules
Similarities between Rule 22(b)(iii) and Article 3 of IBA rules
Comment
Introduction
On September 9 2013 the American Arbitration Association (AAA) issued the revised
Commercial Arbitration Rules, which harmonise the standard for obtaining documents
from an adverse party with the requirements for document production set forth in
Articles 3 and 9 of the International Bar Association (IBA) Rules on the Taking of
Evidence in International Arbitration. The development is significant for international
arbitration practitioners because a substantial number of international arbitrations are
conducted under the AAA commercial rules, and synchronising document discovery
standards under those rules with international practice should result in not only cost
and time savings, but also a more satisfactory process for end users.
Document exchange under previous AAA commercial rules
The AAA's previous version of the commercial rules empowered arbitrators to order the
production of documents requested by another party.(1) However, the previous rules
offered no standard for such requests, which frequently resulted in both parties and
arbitrators defaulting to US court standards of 'relevance'.
"Relevance, for the purposes of [US court] discovery, is a broad concept"(2) that permits
expansive disclosure of "any and all documents" or "all documents concerning" an
issue, without any express materiality limits.(3) Injecting such expansive discovery into
the arbitral process frequently undermined the "twin goals of arbitration" recognised by
US courts – "settling disputes efficiently and avoiding long and expensive litigation"(4) –
which, according to some commentators, made arbitration a less attractive alternative
to court proceedings.(5)
Revisions to document production standards under new rules
Rule 22 of the new AAA commercial rules now provides express standards that
arbitrators must apply to order document production. Specifically, under Rule 22(b)(iii)
documents must be:
l
"not otherwise readily available to the party seeking the documents"; and
l
"relevant and material to the outcome of disputed issues" to be produced.
The latter of those requirements – relevance and materiality – should substantially limit
the scope of document production under the rules.
Moreover, Rule 22(b)(iii) now expressly states that document requests must be
"reasonable". The reasonableness requirement is equally significant in light of the
rule's new relevance and materiality standards.
Similarities between Rule 22(b)(iii) and Article 3 of IBA rules
International arbitration practitioners will quickly recognise the similarities between
Rule 22(b)(iii) of the AAA commercial rules and Article 3 of the IBA rules. Those
similarities become apparent by comparing the three requirements for document
requests under Article 3 of the IBA rules to the standards set forth in Rule 22(b)(iii).
To comply with Article 3 of the IBA rules, document requests must satisfy three
requirements:
l
l
l
They must be narrow and specific, and must identify either individual documents or
categories of document that are described in sufficient detail, which the propounding
party reasonably believes exist.(6)
The requests must state why the propounding party believes that the documents
sought are both relevant to the case and material to the matter's outcome.
The requests must certify that the requested documents are not within the
propounding party's possession, custody or control,(7) and why the burdened party
presumable has the documents.(8)
In short, Article 3 generally prohibits US-style document requests by requiring the
requesting party to issue narrow demands and to justify those demands with credible
explanations of relevance, materiality and need.(9)
Rule 22(b)(iii) adopts the same three general requirements set forth in Article 3 of the
IBA rules and should therefore achieve results similar to those realised by Article 3. For
instance, Rule 22(b)(iii) adopts the relevance and materiality standard employed in
Article 3, which dramatically limits the permissible scope of document requests
because, as any practitioner who has faced overly expansive requests governed by the
IBA rules knows, relevance can often be stretched but materiality can rarely be credibly
exaggerated.
Moreover, while Rule 22(b)(iii) does not state that document requests must be narrow
and specific, it does require document requests to be "reasonable". Reasonableness
is necessarily a question of interpretation, but would seem to exclude blanket requests
for "any and all documents" or "all documents concerning" an issue when viewed in the
context of Rule 22(b)(iii)'s relevance and materiality standard.
Finally, Rule 22(b)(iii) mimics Article 3's obligation not to demand documents that are
within the requesting party's possession, custody or control by requiring that
documents not be "otherwise readily available" to the requesting party. While it would
seem intuitive that parties should not request from their opponent what they can obtain
on their own without undue burden, strategic considerations often outweigh intuition in
the absence of such a restriction.
Comment
The IBA rules have positively impacted on document exchange practices in international
arbitration since their introduction in 1999, and the revisions to the discovery provisions
of the AAA commercial rules should yield similar results. In short, Rule 22(b)(iii) seems
poised to further the twin aims of efficiency and economy that are often touted as
arbitration's advantage, while standardising discovery practices under the AAA rules
with international expectations.
For further information on this topic please contact JP Duffy at K&L Gates by telephone
(+1 212 536 3900), fax (+1 212 536 3901) or email (JP.Duffy@klgates.com ). The K&L
Gates website can be accessed at www.klgates.com.
Endnotes
See Rule 21(a) of the 2009 AAA Commercial Arbitration Rules (authorising
arbitrators to "direct... the production of documents and other information" in a manner
"consistent with the expedited nature of arbitration").
(1)
Noel v Bank of NY Mellon, No 11 Mc 216, 2011 US Dist LEXIS 84106, at *4 (SDNY
July 27 2011).
(2)
Indeed, at present the US federal court discovery rules provide that "[r]elevant
information need not be admissible at the trial if the [documents sought] appear...
reasonably calculated to lead to the discovery of admissible evidence" (Rule 26(b)(1),
Fed R Civ Proc (2012)). However, proposed amendments to those rules would alter the
scope discovery to place emphasis on proportionality as a means of reigning in current
disclosure practices – see Proposed Amendments to Rule 26.
(3)
(4)
Telenor Mobile Commc'ns AS v Storm LLC, 584 F3d 396, 405 (2d Cir 2009).
See Alan Freeman, "Arbitration v Litigation: 7 Factors to Consider Before You Draft a
Mandatory Arbitration Clause", Inside Counsel (April 19 2012).
(5)
(6)
Article 3(a) of the IBA rules (2010).
Alternatively, the requesting party must explain why it would be unreasonably
burdensome for it to produce the documents.
(7)
(8)
Id, Article 3(b)-(c).
See Commentary to the 2010 IBA rules (relating that one of the guiding principles of
the 2010 IBA Working Party was that "[e]xpansive American- or English-style discovery
(9)
is generally inappropriate in international arbitration" and that document requests
"should be carefully tailored to issues that are relevant and material to the
determination of the case").
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