The fact-finding process

2.1 The Tribunal developed (somewhat) standardized fact-finding procedures to lead to (somewhat) greater predictability

International arbitration proceedings by definition involve parties from different legal backgrounds, who have varying, if not conflicting, notions concerning fact-finding procedures.

Arbitration rules tend to deal with this situation with open-endedness, leaving fact-finding to the arbitrators' discretion. The UNCITRAL Arbitration Rules are no exception.

Articles 24 and 25 of the Tribunal Rules, essentially unchanged from the UNCITRAL Arbitration Rules, provide only that each party has "the burden of proving the facts relied upon to support his claim or defense", and the arbitrators have the power to determine "the admissibility, relevance, materiality and weight of the evidence offered". On the one hand, such flexibility was essential when dealing with disputes between the common law US parties and the Islamic law Iranian parties - particularly since each of the three Chambers had one Iranian judge, one US judge and a chairman with (typically) a European civil law background. On the other hand, open-ended rules provide little practical guidance to the parties as to what evidence is needed to support their claims and defenses.

The Tribunal inevitably developed (somewhat) standardized procedures for dealing with evidence, by melding common, civil and Islamic law practices.³ This led to (somewhat) greater predictability and certainty for the parties. A few specific examples are described below.

a) Interested party testimony

The practice with regard to interested party testimony-i.e., testimony from government party officials or company party employees - differs dramatically among the legal systems represented in the lran-US Claims Tribunal. Although it is standard practice in the US to call interested witnesses to testify, the Islamic system prohibits an interested party from testifying and any statements carry no weight.

As Judge Charles Brewer has described, the Tribunal devised a procedure that accommodated both the common law and Islamic law systems, and provided the parties with a predictable rule.• The Tribunal decided that interested parties would not be considered

Not all would be illustrated by Tribunal practice because of its institutional status and jurisdictional parameters, for example, PAULSSON's suggestions concerning confidentiality and multiparty arbitration.

L. REED/J. SUTCUFFE, The "Americanization" of lntemalional Arbitration?, 16 Mealey's International Arbitration Report 37 (April 2001 ).

C.N. BROWERIJ.D. BRUESCHKE, The /ran-United States Claims Tribunal 183-84 (Kiuwer Law International 1998).

"witnesses", but would nonetheless be allowed to make "declarations", and be cross-examined. So-called "party witnesses" were not subject to the formal requirements for witnesses, namely: (i) a witness must recite a solemn declaration of truthfulness pursuant to Note 6(a) of Article 25 of the Tribunal Rules, (ii) a witness may be in the hearing room only while testifying, and (iii) parties must give notice 30 days in advance of a hearing that a witness will testify. Although this is necessarily a subjective impression, Tribunal judges tended to give less weight to (and even disregard) the statement of a party witness as compared to a non-interested witness.

We note that Article 25(2) of the Swiss Rules has been supplemented with the clarifying provision that "Any person may be a witness or an expert witness".

b) Drawing negative inferences from failure to produce documents

Under Article 24{3) of the Tribunal Rules, as in the UNCITRAL and Swiss Rules, at any lime during the proceedings the Tribunal may order production of "documents, exhibits or other evidence". The Tribunal Rules, like the UNCITRAL and Swiss Rules, provide no enforcement mechanism for ensuring that a party complies with a production order or any explicit sanction for failure to do so. Article 24 (unlike Article 26 on Interim Measures) does not contain a provision specifically allowing the parties the right to address judicial authorities regarding discovery matterss

Throughout the history of the Tribunal, parties often disobeyed production orders.⁶ In fact, it has been estimated that parties complied with only approximately half of the Tribunal's production orders.' To address this problem, the Tribunal relied upon the traditional, but generally theoretical, sanction of drawing negative inferences from a party's failure to produce documents, if that party failed to prove that it did not have possession or control of those documents.

For example, in /NA Corporation v. Iran," the Iranian Respondent produced the relevant accountant's audit report but none of the documents upon which the accountant relied. The Tribunal ordered the Respondent to produce the underlying documents, which order the Respondent disobeyed because the documents requested were "too voluminous to be conveniently assembled".⁹ As a result, the Tribunal noted the "lack of supporting

M. PELLONPAAID. CARON, Tile UNCITRAL Arbitration Rules as Interpreted and Applied: Selected Problems in Light of the Practice of the /ran-United States Claims Tribunal 485 (Finnish Lawyers Publishing 1994 ).

PELLONPM and CARON submit that a Tribunal may directly seek the assistance of the courts in discovery matters, pursuant to Article 15(1 ), which gives the Tribunal the power to "conduct the arbitration in such a manner as it deems appropriate." Whether a party may unilaterally do so is an open question that may turn, primarily, on local taw, which may require the Tribunal's permission.

H.M. HoL TZMANN, Fact-Finding by the /ran-United States Claims Tribunal, in Fact-Finding Before International Tribunals 101, 121 (R. B. LILLICH (ed.), Transnational Publishers, Inc. 1992).

PELLONPAAiCARON, supra note 5, p. 484.

Award No. 184-161-1 (12 August 1985), reprinted in 8 lran-U.S. C.T.R 373.

Ibid.

documentation" and assigned little weight to the audit report in assessing the evidencew Similarly, in William J. Levitt v. Iran, ¹¹ the Respondent failed to comply with a production order, and the Tribunal decided to interpret the gaps in the evidence in light of this failure.

The judges, however, disagreed as to the extent of the consequences that the non-complying party should suffer. US Judge Richard Allison criticized the Tribunal for not taking a "more skeptical view of Respondent's submissions in light of the cavalier and seemingly calculated attitude toward the Tribunal's production orders"."

c) Filling evidentiary gaps

The Tribunal filled evidentiary gaps where there was justification for a party's inability to produce documents. For example, the Claimant in PepsiCo v. Iran had no possible access to evidence proving on which date goods had arrived at a port in Iran: the Tribunal therefore assumed that the goods arrived in an average amount of time.'³

2.2 A need to supplement the UNCITRAL Arbitration Rules with standardized evidentiary procedures?

The experience of the lran-US Claims Tribunal illuminates the benefits to parties of more predictable and detailed, if not standardized, fact-finding practices, particularly in an institutional process. Given the diversity of procedural traditions brought by parties to international commercial arbitration, extensive amendment of the UNCITRAL Arbitration Rules obviously is not a feasible avenue to accomplish this. Two possible solutions present themselves, one from Tribunal practice and one post-dating the Tribunal.

First. a Tribunal using the UNCITRAL Arbitration Rules could follow the Tribunal practice of preparing notes on its intended application of the rules, albeit necessarily on a less extensive and formal scale. The Tribunal could address its intentions, for example, as to treatment of interested witnesses, requirements for evidence underlying reports, and the drawing of negative inferences.

Second, a welcome addition to the UNCITRAL Arbitration Rules - or at least to the notes to the UNCITRAL Arbitration Rules - would be a reference to the IBA Rules on the Taking of Evidence in International Commercial Arbitration. lt is not a coincidence that many of the evidentiary practices of the lran-US Claims Tribunal - developed, as noted, to harmonize common, civil and Islamic law procedures-have found their way into the IBA Rules.

10 11 lZ 13

Ibid.

Award No. 520-210-3 (29 August 1991), reprinted in 27 lran-U.S. C.T.R. 145.

Ibid. (AIIison, concurring and dissenting).

PepsiCo v. Iran, Award No. 260-18-1(11 October 1966), reprinted in 13 lran-U.S. C.T.R. 3, 24. The Iranian judge strongly criticized the use of the presumption. Id. at 54. (Ameli, dissenting).