Published in Law360 on February 25, 2021. Reprinted here with permission.

On Feb. 15, the International Bar Association released the long-awaited update, adopted by the IBA Council on Dec. 17, 2020, to the IBA Rules on the Taking of Evidence in International Arbitration.[1]

First formalized in 1999, the IBA rules have become the most widely accepted set of guidelines for international arbitration proceedings. Known for their flexibility, practicality, and blend of common law and civil law practices, the IBA rules are commonly used to fill in the procedural gaps left by arbitral rules and represent basic norms that parties have come to expect from international arbitration.

The 2020 update to the IBA rules marks the first time since May 29, 2010, and only the second time since the IBA rules were first published in 1999, that the IBA rules have been revised. As a result, it is no stretch to expect that the 2020 update to the IBA rules will greatly influence the practice of international arbitration over the next decade.

Notwithstanding the above, the 2020 update reflects a relatively modest refinement, rather than a complete overhaul, of the rules. Most of the modifications reflect an effort by the drafters to clarify nuanced issues of international arbitration practice rather than incorporate fundamental changes in approach or focus.

However, as emphasized by the drafters’ commentary,[2] the 2020 update to the IBA rules made three significant changes related to (1) the need to account for cybersecurity and data protection in initial procedural conferences, Article 2; (2) the adoption of rules concerning the use of remote hearings, Article 8.2; and (3) the incorporation of a new ground to exclude illegally obtained evidence, Article 9.3.

While these modifications may seem innocuous at first glance, as explained below, they are a recognition of how technology has altered, and continues to alter, the practice of international arbitration.

Article 2.2(e): Cybersecurity and Data Protection

Consistent with the 2010 version of the IBA rules, the 2020 update requires the arbitral tribunal to consult with the parties at the earliest appropriate time to determine an “economical and fair process.”[3]

As part of this initial consultation, the IBA rules set out a series of topics that tribunals and parties should consider, including, for example, the preparation and submission of witness statements and expert reports; the taking of oral testimony at the hearing; and the requirements, procedure and format of document production.[4]

The 2020 update has included “the treatment of any issues of cybersecurity and data protection” as new topics of consideration during the initial consultation between the parties and arbitral tribunal.[5] The inclusion of these additional considerations reflects the increasing significance cybersecurity and data protection have played in international arbitration since the 2010 revision of the IBA rules.

First, cybersecurity has been at the forefront of international arbitration for several years after the Permanent Court of Arbitration was the victim of a cybersecurity breach in connection with a contentious China-Philippines maritime boundary dispute in 2015.[6]

Since that time, arbitral institutions, arbitrators, law firms and users have reflected on the need to develop advanced protocols to protect against cybersecurity threats given the sensitive nature of many international arbitration proceedings.

Now, with the increasing use of videoconferencing software to conduct remote hearings in the age of COVID-19, cybersecurity is likely to remain at the forefront of international arbitration proceedings for the foreseeable future.

The inclusion of cybersecurity considerations in Article 2.2(e) of the IBA rules is a recognition that parties and arbitrators must remind themselves of the risks posed by cybersecurity threats and the need to approach this issue with care.

Second, and not to be overlooked, Article 2.2(e) is also a reminder that tribunals and parties must consider data protection regulations developed since the 2010 edition of the IBA rules, such as the European Union’s General Data Protection Regulation.

Indeed, although the IBA rules were designed to allow parties to request documents without the need to heavily rely on electronic discovery practices that may be more common to U.S. litigation, international arbitration is not free from the rigors of national data protection and privacy laws.

Article 2.2(e) is a reminder that parties must consider the implications of data protection and privacy regulations when developing a document disclosure process.

Article 8.2: Remote Hearings

The 2020 IBA rules include a new Article 8.2 that addresses the use of remote hearings in international arbitration.[7] As practitioners in the field of international arbitration are well aware, the COVID-19 pandemic has dramatically altered the ability for parties to conduct in-person hearings.

As a result, remote or virtual hearings have become commonplace. While many practitioners and arbitrators look forward to the return of in-person hearings, most accept that, given their logistical ease and cost advantages, remote hearings will continue to be used long after the COVID-19 pandemic has passed.

Recognizing the present and long-term expectations for the use of remote hearings, Article 8.2 sets out a very practical and useful approach.

First, Article 8.2 establishes that “[a]t the request of a Party or on its own motion, the Arbitral Tribunal may, after consultation with the Parties, order that the Evidentiary Hearing be conducted as a Remote Hearing.”[8]

In doing so, Article 8.2 seemingly puts to rest any doubt that an arbitral tribunal has the authority to compel the use of remote hearing technology in lieu of an in-person hearing even in the face of a party objection.

Second, Article 8.2 calls for the tribunal and parties to develop a remote hearing protocol that addresses five very basic considerations: (1) the specific technology to be used; (2) the need for advance testing of the technology; (3) the start and end times of hearings — in light of conflicts arising from parties in different time zones; (4) how documents are presented to witnesses during the hearing; and (5) how parties can ensure that witnesses provide their testimony without being inappropriately influenced.[9]

To practitioners and tribunals that have been involved in remote arbitration hearings, these five considerations should be relatively uncontroversial. Yet, notwithstanding their simplicity, these five items are the core practical issues that parties and tribunals must consider before embarking on a remote hearing.

In this vein, the drafters of the 2020 update to the IBA rules deserve credit. Recognizing that practice associated with remote hearings remains varied, the 2020 update refrained from providing a detailed and prescriptive set of rules for remote hearings.

Instead, consistent with the IBA rules’ overarching effort to prioritize flexibility and party autonomy, the 2020 IBA rules incorporated a series of very basic items that parties and tribunals must address before electing to use remote hearings.

The core issues identified in Article 8.2 will serve as a helpful checklist for tribunals and parties to look to when developing an approach to remote arbitration hearings.

Article 9.3: Illegally Obtained Evidence

Finally, the 2020 IBA rules have incorporated the entirely new Article 9.3 providing that arbitral tribunals “may, at the request of a Party or on its own motion, exclude evidence obtained illegally.”[10]

Although the commentary to the IBA rules uses the example of nonconsensual audio recording as a potential type of illegally obtained piece of evidence,[11] the new rule appears to be in response, at least in part, to cybersecurity concerns and whether hacked or improperly leaked information can be used in an international arbitration proceeding.

The drafters of the 2020 update intentionally kept the language of Article 9.3 broad and refrained from capturing specific circumstances because national laws vary widely on the issue of whether illegally obtained evidence should be excluded from criminal and civil court proceedings.

As a result, the question of whether illegally obtained evidence can be presented in an arbitration will hinge, in large part, on the applicable law as well as the discretion of the arbitral tribunal itself, taking account of the totality of the circumstances.

In practice, it is not entirely clear how Article 9.3 will affect international arbitration proceedings apart from highlighting a potentially complex area of debate. However, as disputes captured by Article 9.3 arise, one potential area of focus should be on whether arbitral tribunals apply a flexible standard for assessing whether to exclude illegally obtained evidence or the more standardized doctrinal rules of evidence, such as the fruit of the poisonous tree doctrine in the U.S.

Conclusion

The 2020 update to the IBA rules reflects a careful attempt by the drafters to ensure these widely accepted guidelines account for the modern-day challenges presented in international arbitration proceedings. To that end, the drafters deserve credit for resisting the temptation to incorporate far more prescriptive requirements aimed at promoting certain best practices.

In doing so, the 2020 update to the IBA rules ensures that the rules will remain the same flexible and practical set of guidelines for international arbitration proceedings for the foreseeable future.


[1] During the intervening period, the 2020 IBA Rules of Evidence Review Task Force updated the accompanying Commentary on the revised text of the 2020 IBA Rules on the Taking of Evidence in International Arbitration.

[2] IBA Task Force for the Revision of the IBA Rules on the Taking of Evidence in International Arbitration, Commentary on the revised text of the 2020 IBA Rules on the Taking of Evidence in International Arbitration at 3 (Jan. 2021).

[3] IBA Rules on the Taking of Evidence in International Arbitration, dated 17 December 2020, Art. 2.

[4] IBA Rules on the Taking of Evidence in International Arbitration, dated 17 December 2020, Art. 2.

[5] IBA Rules on the Taking of Evidence in International Arbitration, dated 17 December 2020, Art. 2.

[6] Jason Healey & Anni Piiparinen, Did China Just Hack the International Court Adjudicating Its South China Sea Territorial Claims?, DIPLOMAT (Oct. 27, 2015), http://thediplomat.com/2015/10/did-china-just-hack-the-international-court-adjudicating-itssouth-china-sea-territorial-claims/.

[7] IBA Rules on the Taking of Evidence in International Arbitration, dated 17 December 2020, Art. 8.2.

[8] IBA Rules on the Taking of Evidence in International Arbitration, dated 17 December 2020, Art. 8.2.

[9] IBA Rules on the Taking of Evidence in International Arbitration, dated 17 December 2020, Art. 8.2.

[10] IBA Rules on the Taking of Evidence in International Arbitration, dated 17 December 2020, Art. 9.2.

[11] IBA Task Force for the Revision of the IBA Rules on the Taking of Evidence in International Arbitration, Commentary on the revised text of the 2020 IBA Rules on the Taking of Evidence in International Arbitration at 30 (Jan. 2021).