Bird & Bird’s French Dispute Resolution team is pleased to present the April 2017 issue of The Arbitration Minute:
- Production of documents in arbitration: should one give all? (Part II)
- Should one ask the arbitral tribunal to apply default interests on the amounts that will be awarded?
Production of documents in arbitration: should one give all? (Part II)
In our February 2017 Arbitration Minute, we considered the obligation of a party to comply with an order from an arbitral tribunal to produce documents. The Paris Court of Appeal, in a judgment dated 28 February 2017, provides guidance in relation to the production of documents in the absence of an order from the arbitral tribunal.
In the case at issue, a party requested documents from the opposing party during the document production phase of an ICC arbitration. The opposing party neither raised objections nor produced the requested documents. The arbitral tribunal did not order that party to produce these documents and based its award solely on the documents on record in the arbitration.
In its award, the arbitral tribunal nevertheless stated with respect to the absence of production that "[…] majority of the arbitrators of the arbitral tribunal infers that these documents would be prejudicial to Respondents’ interests, in particular insofar as they could have shown that Respondents had actual knowledge of the violation of the articles […]". The arbitral tribunal thus applied the adverse inferences mechanism set out in Article 9.5 of the International Bar Association (IBA) Rules on the Taking of Evidence in International Arbitration (2010) which were part of the procedural rules accepted by the parties in this arbitration. This mechanism allowed the arbitral tribunal to infer that the requested documents that were not produced were adverse to the interests of the party who failed to produce them without making any objection.
It is accordingly essential to reply to all document production requests either by producing the requested documents or by objecting.
Judgment cited: Paris Court of Appeal, Pole 1, Chamber 1, 28 February 2017, n° 15-06036
Should one ask the arbitral tribunal to apply default interests on the amounts that will be awarded?
Yes. One should ask the arbitral tribunal to award default interests in order to prevent the losing party from delaying payment.
These interests will apply to the amounts awarded and incite the losing party to settle these amounts as quickly as possible, failing which, its debt will increase over time. The starting point for such interests may be the date of the award, or a later date, thereby giving the losing party more time to remit the funds.
Although arbitral tribunals generally have a broad discretionary power to award default interests (under national laws and the rules of arbitral institutions), it is advisable to specifically request the arbitral tribunal to award these. Unlike before national courts, it is important to refer the arbitral tribunal to the legal basis for awarding default interests and justify the applicable rate.
If interest is not requested, or the request is not motivated, it is difficult for the arbitral tribunal to award interest.