THE PRAGUE RULES: THE DRAFTING HISTORY

1. THE PRAGUE RULES: THE DRAFTING HISTORY Alexandre Khrapoutski Vice Chairman of the Board, RAA Partner, SBH Law Office Madrid, 11 January 2019

2. Agenda

4. IBA Rules on the Taking of Evidence in International Arbitration • Was intended as a bridge between civil law and common law systems • The IBA Rules of Evidence reflect procedures in use in many different legal systems, and they may be particularly useful when the parties come from different legal cultures… (IBA Rules, Foreword).

5. Common law features in the IBA Rules (1/5) • Unlimited right of the parties to bring witnesses of fact and experts • 2. Any person may present evidence as a witness, including a Party or a Party’s officer, employee or other representative… • 6. If Witness Statements are submitted, any Party may, within the time ordered by the Arbitral Tribunal, submit to the Arbitral Tribunal and to the other Parties revised or additional Witness Statements, including statements from persons not previously named as witnesses, so long as any such revisions or additions respond only to matters contained in another Party’s Witness Statements, Expert Reports or other submissions that have not been previously presented in the arbitration… • 10. At any time before the arbitration is concluded, the Arbitral Tribunal may order any Party to provide for, or to use its best efforts to provide for, the appearance for testimony at an Evidentiary Hearing of any person, including one whose testimony has not yet been offered… IBA Rules, Article 4, Witnesses of Fact

6. Common law features in the IBA Rules (2/5) • Unlimited right of the parties to bring witnesses of fact and experts, cont. • 1. A Party may rely on a Party-Appointed Expert as a means of evidence on specific issues. Within the time ordered by the Arbitral Tribunal, (i) each Party shall identify any Party-Appointed Expert on whose testimony it intends to rely and the subject-matter of such testimony; and (ii) the Party-Appointed Expert shall submit an Expert Report. • 3. If Expert Reports are submitted, any Party may, within the time ordered by the Arbitral Tribunal, submit to the Arbitral Tribunal and to the other Parties revised or additional Expert Reports, including reports or statements from persons not previously identified as Party-Appointed Experts, so long as any such revisions or additions respond only to matters contained in another Party’s Witness Statements, Expert Reports or other submissions that have not been previously presented in the arbitration. IBA Rules, Article 5, Party-Appointed Experts

7. Common law features in the IBA Rules (3/5) • Assumption of written witness statements • 4. The Arbitral Tribunal may order each Party to submit within a specified time to the Arbitral Tribunal and to the other Parties Witness Statements by each witness on whose testimony it intends to rely, except for those witnesses whose testimony is sought pursuant to Articles 4.9 or 4.10. … • 5. Each Witness Statement shall contain: IBA Rules, Article 4, Witnesses of Fact

8. Common law features in the IBA Rules (4/5) • Assumption of cross examination • 3. With respect to oral testimony at an Evidentiary Hearing: • (a) the Claimant shall ordinarily first present the testimony of its witnesses, followed by the Respondent presenting the testimony of its witnesses; • (b) following direct testimony, any other Party may question such witness, in an order to be determined by the Arbitral Tribunal. The Party who initially presented the witness shall subsequently have the opportunity to ask additional questions on the matters raised in the other Parties’ questioning; … IBA Rules, Article 8 Evidentiary Hearing

9. Common law features in the IBA Rules (5/5) • Assumption of documents production • 2. The consultation on evidentiary issues may address the scope, timing and manner of the taking of evidence, including: … (c) the requirements, procedure and format applicable to the production of Documents; IBA Rules, Article 2 Consultation on Evidentiary Issues • … 2. Within the time ordered by the Arbitral Tribunal, any Party may submit to the Arbitral Tribunal and to the other Parties a Request to Produce…. • 10. At any time before the arbitration is concluded, the Arbitral Tribunal may (i) request any Party to produce Documents, (ii) request any Party to use its best efforts to take or (iii) itself take, any step that it considers appropriate to obtain Documents from any person or organisation. … IBA Rules, Article 3 Documents

10. Prague Rules: Drafting History • Discussion of the results of the survey • Debate on Prague Rules • Working Group started work on the Rules • Analytical Note re procedure in civil and common law countries; • First concept of the European Rules of Taking Evidence • Explanatory Note on adopting the European Rules of Taking Evidence • Working Group to work on the concept of the Rules • Research: arbitration rules' provisions on examination of evidence • Work on the Declaration of the Prague Rules • Workshop III ICC Advanced Arbitration Academy for Central & Eastern Europe • Survey on procedural traditions • drafting questionnaire • launching the survey • Analyzing results of the survey • Comparing Explanatory Note and survey results • Finalizing concept of the Prague Rules Jan 2016 – Sep 2016 Jan 2015 - June 2015 12 December 2014 June 2015 - Jan 2016 April 2017 Oct 2016 - Feb 2017 • First draft of the Prague Rules • Discussion of the draft rules at arbitration events; • Amending the draft Prague rules • Declaration on Development of Prague Rules sent • Official launch in Prague • First conceptual draft of the rules; • First public event to discuss the rules Mar 2018 – Dec 2018 May 2017 Jan 2018 Sep 2017, EEDRF, Minsk 14 December 2018

11. Prague Rules: Survey on Procedural Traditions Settlement facilitation Witnesses of fact Case management conference Admissibility and assessment of evidence Conduct of the proceedings Expert witnesses Documentary evidence Production of documents Questionnaire: 37 questions, 10 sections Evidentiary hearing Role of the tribunal in establishing the facts of the case and determining the applicable law

12. Prague Rules: Survey on Procedural Traditions Results: 29 country chapters

13. The main purpose of the Survey The main purpose of the Survey was to research whether the main ideas of the Prague Rules are applicable in different civil law countries. • 2015-2016 • Formation of the working group for the drafting of the Prague Rules. • The conduct of the research on the practices of taking of evidence used in different civil law jurisdictions (29 countries). • Analysis of research results and development of the Prague Rules’ concept.

14. RESULTS OF THE SURVEY ON PRACTICE OF THE TAKING OF EVIDENCE IN ARBITRATION Establishing the facts

15. Features of the Prague Rules ROLE OF THE TRIBUNAL IN ESTABLISHING THE FACTS OF THE CASE • Russian tribunals, just like Russian courts, are rather proactive in establishing the facts. Sometimes the awards are based on the facts obtained by the tribunal members from the open sources (Russia, Ukraine, Kazakhstan). • In practice the tribunal is proactive in establishing of facts (Belarus). • Egyptian tribunals, just like Egyptian courts, are rather proactive in establishing the facts and the process could be quite inquisitorial (Egypt). • Usually tribunals try to explain to the parties what facts are contradictory or which may have importance for the outcome of the dispute, but have not provided by the parties (Estonia).

16. Features of the Prague Rules ROLE OF THE TRIBUNAL IN ESTABLISHING THE FACTS OF THE CASE • It might be a legacy of the former USSR, but local arbitrators use an inquisitorial approach to establishing the facts. Tribunals plays proactive role in establishing the facts and requires to provide additional documents and it can do it itself (The inquisitorial approach prevails over the adversary nature of the judicial of the proceeding) (Kyrgyzstan). • The arbitral tribunal is usually allowed to conduct its own investigations and to accept further evidence requests made by the parties (Portugal). In practice arbitral tribunal plays very important role in establishing the facts of the case. Moreover, certain arbitration rules, such as Art. 25(1) of the ICC Rules, provide that the arbitral tribunal shall establish the facts of the case by all appropriate means.

17. RESULTS OF THE SURVEY ON PRACTICE OF THE TAKING OF EVIDENCE IN ARBITRATION Document production The majority of the Respondents confirmed that the party can request the production of documents from the opposing party. Scope On the question of how narrow the documents should be determined in the request, the majority of the Respondents (73%) noted that the request should be for a specific document and should provide sufficient details to allow identification of such a document. Support The tribunal can and usually does request production of any documents it believes to be relevant and material for the outcome of the case, but usually this is very limited to few documents and not extensive (Albania, Egypt, Georgia).

18. ACTIVE ROLE OF TRIBUNAL IN FACT FINDING.THE RIGHT OF THE TRIBUNAL TO ORDER DOCUMENT PRODUCTION ON ITS OWN MOTION General concept - The parties are free to submit and use any documentary evidence which they deem important and relevant in support of their case. Each party shall decide what kind of documents should be submitted.  • The tribunal can and usually does request production of any documents it believes to be relevant and material for the outcome of the case (Albania). • At any stage of the arbitration, the tribunal shall request to the parties production of any documents related to the case (Georgia). • Party’s request for production of documents must not be too broad or vague and must include a list of specific documents or at least a specific category of documents. Undoubtedly, sufficient details to allow identification of a document are welcomed (Lithuania).

19. RESULTS OF THE SURVEY ON PRACTICE OF THE TAKING OF EVIDENCE IN ARBITRATION

20. RESULTS OF THE SURVEY ON PRACTICE OF THE TAKING OF EVIDENCE IN ARBITRATION

21. Prague Rules: Working Group Members

22. Prague Rules: Working Group Members

23. Prague Rules: Drafts • 11 Apr 2018 • 17 Aug 2018 • 01 Sep 2018 • 19 Oct 2018 • 09 Nov 2018 • 07 Dec 2018 • Final drafts: • English • Russian • Spanish • Portuguese

24. Prague Rules: Discussion at Arbitration Events Portugal UK Georgia Austria Latvia Belarus Russia Ukraine US PRC Lithuania PRC Spain France Poland Sweden

25. Features of the Prague Rules • An active role of the tribunal in establishing facts The tribunal may, after having heard the parties, at any stage of the arbitration and on its own motion: • request evidence; • appoint an expert examination; • appoint an expert of the tribunal; • order site inspectionsand for the purposes of fact finding take any other actions which it deems appropriate; • decide which witnesses are to be called for examination during the hearing.

26. Features of the Prague Rules • An active role of the tribunal in managing the procedure: • early determination of the issues to be resolved; • the right of the tribunal to indicate to the parties its preliminary views with regard to: • the allocation of the burden of proof between the parties, • the relief sought, • the disputed issues, and • the weight and relevance of evidence submitted by the parties; • the right of the tribunal to facilitate an amicable settlement (without the risk of being disqualified)

27. Features of the Prague Rules • Restrictions on the document production (including and all the more so, e-discovery): • The general rule is that the tribunal and the parties are encouraged to avoid any form of document production, including e-discovery; • If a party needs document production, the party • should indicate this to the tribunal at the case management conference (and only in exceptional circumstances - at a later stage of the arbitration); • substantiate why document production is needed in the particular case; • A party may request the tribunal to provide a specific document (relevant and material to the outcome of the case)

28. Features of the Prague Rules • Restrictions on the witness evidence: • the tribunal’s right to decide which witnesses are to be called for examination during the hearing; • the tribunal’s right not to call a witnessif the tribunal considers the testimony of such a witness to be irrelevant, immaterial, unreasonably burdensome, duplicative or for any other reasons not necessary for the resolution of the dispute; • As a rule, written witness statements should not be used, except where invited by the tribunal or filed by a party in case the witness was rejected to appear at the hearing;

29. Features of the Prague Rules • Experts. The right of the tribunal to appoint an expert on its own motion Prague Rules: • At the request of a party or on its own initiative and after having heard the parties, the arbitral tribunal may appoint one or more independent experts. The expert’s terms of reference will be prepared by the arbitral tribunal in consultation with the parties. • The tribunal-appointed expert will have the right to request any relevant information directly from the parties or through the arbitral tribunal. • The parties will need to provide the advance on costs (in equal parts) to cover the tribunal-appointed expert’s fees.

30. Features of the Prague Rules • Active role of tribunal in settlement of dispute • The arbitral tribunal shall be required to actively assist the parties in reaching the settlement. • The arbitral tribunal may at the case management conference or at any later stage of the arbitration, if it deems it appropriate, indicate to the parties its preliminary views on the allocation of the burden of proof between the parties; the relief sought; the disputed issues; and the weight and relevance of evidence submitted by the parties.

31. Arbitral Institutions • More than 20 arbitral institutions and arbitration associations supporting the Prague Rules By signing the Prague Rules organizations and individuals acknowledge that the Prague Rules contribute to the development of international arbitration and provide the parties with a useful option in regulating the arbitration procedure. At the same time, the endorsing of the Prague Rules does not entail an obligation of the institutions or individuals to always apply the Prague Rules and they would be used where and whereby the parties or required by the circumstances.

32. Prague Rules: Further Steps Standard Arbitration Clause Providing for the Application of the Prague Rules Procedural Order No1

33. Thank you for your attention Alexandre Khrapoutski Vice Chairman of the Board, RAA Partner, SBH Law Office Madrid, 11 January 2019