Abstract
No legal proceeding can succeed without evidence. In international construction arbitration, this evidence can take myriad forms. In addition to this, given the plurality of the legal cultures which interact in the international arena, the procedure may also vary. This Blog Post discusses the streamlined procedure put in place by the international community for efficiently and fairly gathering evidence in international construction arbitration. The Blog Post also focuses on the kind of evidence which should be prioritized in these proceedings.
Introduction
They say that justice is blind, and rightly so. Considering that justice has been traditionally administered in a confrontational system, it is only natural that statements and claims of parties are treated with an air of mistrust. Justice often tends to concern itself more with the evidence in front of it as opposed to what the parties are saying. Therefore, what turns any given case in favor (or against) a party are the supporting documents tendered as evidence in support of their averments and their case.
The situation is similar in international construction arbitrations. Cross-border commercial disputes leading to international arbitrations usually comprise multi-million dollar claims and counterclaims; these claims are further augmented by several volumes of expert testimonials. In such a scenario, it would be highly prejudicial if parties were permitted to benefit by concealing material documents exclusively in their possession (and detrimental to their case).
In addition, the dispute usually has parties belonging to different legal traditions, having different rules of procedure, speaking different languages, and having varied ways of running their business. To add to the mix, the nature of international arbitrations allows parties to adopt their procedure. As such, the process of collecting and tendering evidence during the proceedings can become extremely cumbersome and, consequently, time and resource-consuming if parties were given a free hand. For this reason, there is a need for a streamlined process in which the entire procedure can be carried out.
This is where the Redfern Schedule comes into the picture and attempts to bridge the gap which exists between the parties while simultaneously making the process much more cost and time efficient. In this Blog Post, we will understand this procedure and how the Redfern Schedule achieves this efficiency.
Nature of Works in Transnational Construction Projects: A Web of Complexity
In international construction, how the industry works is that one party, usually the contractor, would be the winning bidder for a given construction project comprising several works. The contractor would, in turn, hire different sub-contractors for the completion of each such individual work while retaining the responsibility of coordinating and putting together the individual works/components completed by each sub-contractor. As such, any international construction project would usually comprise of several different works, inter-alia, including sourcing of individual components necessary for the completion of the project, design and drawing up of manufacturing plans for each such individual component, the actual process of manufacture and prototype testing, shipment of the components to the site of work, the assembly of the components at the site, and civil works. To add to their complexity, each sub-contractor further interacts with various actors for different sorts of things ranging from raw material to third parties running specialized units for carrying out prototype testing of the components manufactured and other similar processes.
Thus, it is safe to say that any international construction project involves massive coordination between this vast web of actors involved. Actions on the part of any one actor can hurt the ability of others to discharge their obligations and ultimately lead to delays in the completion of the project. To understand this, it is important to appreciate that the capacity of any party, be it for the manufacturing of components, prototype testing, or even the preparation of designs, is limited. For this reason, parties in the industry pre-plan their production process or utilization of their limited resources. This is done in a manner to optimize time and cost, balancing the interests of the different orders at their end and ensuring that no bottleneck occurs at any point during the process. For this reason, a delay in agreed timelines could result in this pre-planning going for a toss, which can result in bottlenecks, increased overhead costs, increase in the prices of raw materials (thereby decreasing the profit margin), unavailability of slots (for prototype testing, for shipping, etc.). Let us look at a few examples to understand this better:
1. In a contract for the supply of certain steel components by a sub-contractor, the contractor was required to provide the sub-contractor with the engineering designs. Therefore, a delay or failure on the part of the contractor to provide such engineering designs incapacitates the sub-contractor from being able to discharge its obligation promptly.
2. In another contract for civil works, the sub-contractor was required to assemble different parts of a transmission line tower and to carry out their erection. However, due to a delay on the part of another subcontractor contracted to provide the individual components necessary for an erection, the contractor could not ensure that the necessary parts were at the site on time. Due to this, the sub-contractor will be unable to discharge its obligations promptly.
In the first example, we can see how, due to a delay on the part of the contractor, the sub-contractor was precluded from being able to fulfill its obligations. In the second example, we see that due to a delay on the part of one sub-contractor (in manufacturing and providing the necessary components), another sub-contractor (responsible for civil works and erection of the towers) was unable to fulfill its obligations in the stipulated time. Thus, it can be seen that these issues later become contentious claims in fiercely fought-out arbitrations.
The Need for Disclosure
An international Arbitral Tribunal is focused on arriving at the truth of the dispute between the parties, and to this end, each party adduces voluminous documents to support its claims. However, in certain cases, especially in disputes concerning construction arbitration, there is potential for great prejudice being caused to a party if it were expected to substantiate its claims merely based on documents that are already in its possession. This is on account of the specific nature of the international construction industry, as discussed above. From the two examples which we examined in the previous section, the civil works sub-contractor, not being privy to the contract between the contractors and the manufacturing sub-contractor, would be placed in a disadvantageous position if such sub-contractor was expected to substantiate merely based on the documents in its possession. This is because such a sub-contractor would never have access to any document which would disclose communications that took place between the contractor and the manufacturing sub-contractor. This being the case, such a sub-contractor would never have knowledge or any evidence which would help it in its claims against the contractor in a potential dispute. As such, a disclosure stage is an important tool in any international arbitration for demonstrating to the Arbitral Tribunal facts, which a party could not have proved otherwise had it been restricted to only rely on documents in its possession. In addition, the fact that parties know that they will have to disclose documents in their possession that can incriminate or take away merit from their case also acts as a deterrent against fanciful and exaggerated claims being raised in the arbitration.
The need for a streamlined manner for taking evidence in international arbitration was felt on account of thedifferent legal cultures existing in different countries. Due to the differences in the manner in which the issue is approached, if parties were to be given a free hand, the same would result in increased cost and workload for both the parties and the Arbitral Tribunal. This need is specifically recorded in thepreface to the 2020 edition of the International Bar Association Rules on the Taking of Evidence in International Arbitration [“IBA Rules on Evidence/the Rules”] as follows: “The IBA issued these Rules as a resource to parties and to arbitrators to provide an efficient, economical, and fair process for the taking of evidence in international arbitration. The Rules provide mechanisms for the presentation of documents, witnesses of fact and expert witnesses, inspections, as well as the conduct of evidentiary hearings. The Rules are designed to be used in conjunction with, and adopted together with, institutional, ad hoc, or other rules or procedures governing international arbitrations. The IBA Rules of Evidence reflect procedures used in many legal systems, and they may be particularly useful when the parties come from different legal cultures.”
The Redfern Disclosure
TheICC Commission Report on Controlling Time and Costs in Arbitration, in Paragraph 51 (Establishing Procedure for Requests for Production), specifically refers to the IBA Rules on Evidence. It states that parties “…could consider referring to Article 3 of the IBA Rules on Evidence for guidance.” Article 1 of the Rules makes it clear that Article 3 of the IBA rules on Evidence may be applied to a given international arbitration if,
a. The Parties agree to the same, either in the arbitration agreement itself or subsequent thereto during the first few arbitral hearings conducted for the purposes of arriving at a mutually agreeable procedure; or
b. The Arbitral Tribunal determines that the Rules ought to be applied.
Article 3.3 of the Rules culls out specifics of what a request to produce documents must contain, andthese are namely,
a. A description of each requested document is sufficient to identify it,
b. A brief description to substantiate that the document requested is reasonably believed to be in existence and the possession of the other party, and in the case of electronic documents, specific search terms may be required to be provided as well,
c. A brief statement to show how the document requested is relevant to the case and material to its outcome,
d. A statement as to how the document(s) requested is not in the custody of the requesting party or a statement of reasons as to why it would be unreasonably burdensome for the requesting party to produce such document(s).
Article 3.5 of the Rules entitles the party who is on the receiving end of the request to produce documents to object to the production of any requested document. However, this provision specifically clarifies that the right to object would be of a limited nature and can be done only on the grounds more specifically enumerated in Articles 9.2 and 9.3 of the Rules or on account of a failure to comply with the diktats of Article 3.3. The said grounds for objection, as enumerated inArticles 9.2 and 9.3, are namely,
a. Lack of sufficient relevance to the case or the materiality of its outcome,
b. Legal impediment or privilege under the legal or ethical rules determined by the Arbitral Tribunal,
c. Unreasonable burden to produce the requested evidence,
d. Loss or destruction of the document that has been shown with the reasonable likelihood to have occurred,
e. Grounds of commercial or technical confidentiality that the Arbitral Tribunal determines to be compelling,
f. Grounds of special political or institutional sensitivity, including evidence that has been classified as secret by a government or a public international institution, which the Arbitral Tribunal determines to be compelling,
g. Considerations of procedural economy, proportionality, or equality of the parties that the Arbitral Tribunal determines to be compelling,
h. The Arbitral Tribunal may, at the request of a party or on its motion, exclude evidence obtained illegally.
Upon receipt of an objection on any of the grounds enumerated above, the Arbitral Tribunal may invite the parties toconsult with each other to resolve the objection. In addition, either party may request the Arbitral Tribunal to rule on the objection. Upon receipt of such a request, the Arbitral Tribunal maydirect the concerned party to respond to the objection before making an order on such a request. If the Arbitral Tribunal passes an order directing a party to produce certain documents requested for, then such party, notwithstanding its objection, is required to provide such documents to the other side.
The entire procedure mentioned above is captured in an organized and efficient manner by the Redfern Schedule, and a sample of such a table may look like this:
| Sr. No | Documents or categories of Documents Requested | Relevance and materiality of the requested documents according to the requesting party | Responses/objections to the request for documents |
Reply to responses/ objections to the request for documents |
Decision of the Arbitral Tribunal | |
| References to the writings, annexes, testimonial statements, or expert reports | Comments | |||||
Each column in the Redfern Schedule corresponds to the requirements laid out by the IBA Rules.
Documents to Seek
It is important to remember that there is no straight-jacket formula for what documents to seek during the disclosure stage. A variety of factors will go into ascertaining the specific request, and the same will have to be dealt with on a case-to-case basis. Some of the factors which may play a role can inter-alia include the nature of the project, the nature of the parties (whether they are governmental or non-governmental bodies), the nature of the claims, the number of subcontractors involved in the project, whether there are third parties not privy to the main contract between the parties involved in its execution, whether the documents concerned are in the electronic format, and other similar factors.
However, having said that, certain documents tend to be of great importance regardless of the peculiar nature of the construction project in question. These documents may inter-alia include,
a. Internal correspondences of the parties about the project, and its timelines and deliverables;
b. Correspondences between one of the parties and other third parties engaged by it to complete the works under the project;
c. Progress reports/status reports submitted by the various sub-contractors/third parties to the contractor/sub-contractor inter-alia relating to design and engineering work, manufacturing, and civil works;
d. Correspondences between the end client and the contractor regarding the project and its requirements;
e. Correspondences between a party and its lenders;
f. Documents about specific averments made by the party in its pleadings and for which no supporting documentation has been provided;
g. Minutes of any meetings held between the party and a third party having material relevance to the claims in the arbitration.
The requests mentioned above should further be qualified by providing a window of time in which the requesting party believes the documents/correspondences were generated. These documents are an indicator of the form of documents that can be requested. Each of the said documents would help the requesting party to see more than just what is right in front of it, thereby enabling it to make its case better. The requested documents will also ensure that the party in whose possession they exist cannot take advantage of t own wrongs merely because the other side does not know these said wrongs.
Conclusion
Thus, we see that the Redfern Schedule has been widely recognized as the go-to form of submitting and entertaining requests for the disclosure of documents because it succinctly captures the fixed criteria laid out by the IBA Rules on Evidence and provides an organized manner for implementing and availing the said criteria. In doing so, the Redfern Schedule ensures that parties are not handicapped by a completely new form of procedure that is different from the domestic procedure. This is done by making the process relatively simple and easy to understand even for a first-timer.
Moreover, from the point of view of merit in a party’s case, the importance of the disclosure stage and the Redfern Schedule cannot be overstated. It strives to ensure the parties’ equality and perpetuate the spirit of fairness in arbitral proceedings. Therefore, as of today, most parties are willing to opt for incorporating the Redfern Schedule in the procedure that they adopt in their arbitration agreements.
Disclaimer
Views expressed are personal.
About the Author
Mr. Swapnil Srivastava is an Associate at MZM Legal LLP, New Delhi.
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Preferred Method of Citation
Swapnil Srivastava, “The Redfern Schedule in International Construction Arbitrations” (IJPIEL, 16 September 2022)
<https://ijpiel.com/index.php/2022/09/16/the-redfern-schedule-in-international-construction-arbitrations/>
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