Karina Goldberg, Ferro, Castro Neves, Daltro & Gomide Advogados
This is an extract from the fourth edition of GAR’s The Guide to Advocacy. The whole publication is available here.
The aim of this chapter is to outline some of the aspects of evidence production in arbitration proceedings held in Brazil that highlight some of the peculiarities of our domestic practice in relation to standard international practice, which is mainly due to our civil law tradition and the influence of domestic litigation.
In this regard, three important methods of evidence production are considered: (1) witness examination, (2) document production and (3) technical evidence production.
In Brazil, as in the international context, the procedural aspects of arbitration are not exhaustively disciplined by the Brazilian Arbitration Law nor by the rules of the arbitral institutions. As is the case in most jurisdictions, Brazil’s Code of Civil Procedure (applicable to domestic litigation) is not automatically applicable to arbitration proceedings, in which arbitrators boast extensive powers in regard to the production of evidence.
It is precisely in the discipline of evidence that there is one of the greatest ‘clashes’ of arbitration: flexibility against legal certainty. Although it is not intended to compromise the flexibility of the procedure, it is necessary that the stages for the production of evidence are predictable. Uncertainty about the specific procedural rules governing testimonial evidence, for example, can risk due process and the efficiency of the proceeding.
In view of this, it is the duty of the arbitrators, respecting the will of the parties, to establish the necessary rules for conducting the production of the oral examination according to the needs and form of the arbitration proceeding. It is not common practice for Brazilian parties in domestic arbitration, at the outset of the proceeding, to apply the IBA Rules for Taking of Evidence or even to agree on procedural rules for witness testimony (or the production of evidence in general terms), that is to say, in the terms of reference or Procedural Order No. 1.
In domestic cases, Brazilian arbitrators often issue a procedural order at the end of the pleading phase (memorials phase) inviting the parties to state whether they want to produce testimonial evidence and to submit the names of the factual witnesses, identifying the specific facts about which the witnesses may testify. Some arbitrators invite the parties to submit witness statements before the evidentiary hearing, but this is not common practice in domestic arbitration in Brazil.
Regarding the dynamics of the production of testimonial evidence in domestic cases, a witness examination is generally carried out first by the counsel of the party who appointed the witness for direct examination. Subsequently, the witness will be questioned by counsel of the opposing party (cross-examination), whose questions are limited to the subjects that were addressed during the direct questioning or to the questions posed by the tribunal. Re-direct examination followed by re-cross examination by the opposing counsel is also possible, but always limited to the answers given by the witness during the first examination.
Contrary to international practice, in most domestic arbitration cases, testimonial evidence does not encompass witness statements made before the evidentiary hearing. This may be an issue for the opposing counsel’s preparations, as he or she will not have details of the testimony to be presented at the hearing. Brazilian arbitrators usually consider that witnesses act more spontaneously during direct examination and therefore prefer this method. Direct examination also allows more flexibility to conduct cross-examination as the scope of the testimony may become broader than is usual in a written witness statement. As a rule, arbitrators do not allow leading questions during a direct examination, only during cross-examination. Further, in domestic cases, arbitrators will very often reject questions to factual witnesses regarding contractual interpretation or that contain arguments from the party.
Cross-examination can also be used for experts contracted by the parties to provide technical evidence. In most cases, examination is limited to the content of an expert’s report and arbitrators can invite experts for both parties to focus only on the technical issues on which they disagree. As may be seen in the following section, in domestic cases it is common for arbitrators to appoint their own expert to opine upon the adversarial technical reports brought by the parties.
Another peculiarity of Brazilian domestic arbitration is the potential application of rules of domestic litigation when questioning parties’ legal representatives. Whereas in international proceedings a party’s representative is heard in the same capacity as a factual witness, in Brazil the legal representative may not be sworn to testify under oath and, consequently, arbitrators may not give the same weight to their testimony. In other words, legal representatives may not have the same obligation as factual witnesses to tell the truth under the charges of false testimony provided in Article 342 of the Criminal Code. In contrast, in international arbitration, legal representatives are always sworn and shall testify with a commitment to tell the truth.
In Brazilian domestic arbitration, parties can expect the proactive participation of arbitrators at the evidentiary hearing, who, in addition to the elucidative interferences, can, at any moment, formulate questions about topics not addressed by counsel and determine the examination of witnesses not appointed by the parties. Arbitrators have a duty to oversee the process of witness examination and any actions that may affect the effectiveness of the proceedings, such as curbing any language that may cause offence and otherwise protecting witnesses, and discouraging dramatic performances and overlong questioning.
The Brazilian Arbitration Law allows the parties of domestic arbitration a great deal of freedom in choosing the rules that will be applicable to the procedure, which means that the Brazilian Code of Civil Procedure is not automatically applied. When it comes to document production, parties may agree to follow international arbitration procedural rules, such as the IBA Guidelines or the UNCITRAL Arbitration Rules.
Because of this, in practice, arbitration is more flexible than court procedures – which are commonly described by national doctrine as rigid – including regarding the production of documentary evidence. In court procedures, there are specific timings and methods to be observed: the parties usually attach available documents to their initial complaint (i.e., the statement of claim), but only after they have responded to each other’s claims are they able to specify the type of evidence they intend to produce in the court, indicating its relevance to the judgment of the case.
Therefore, if a party wishes to request production of a document by its adversary, it often has to wait until the specified time for submission of evidence to file its request. Only after that, based on the parties’ allegations, will the judge determine what evidence needs to be produced and what does not. If the judge admits a request for production, the requested party may only exempt itself from presentation of the document in the instances expressly stated in the Code of Civil Procedure.
In domestic arbitrations, on the other hand, these formalities do not necessarily apply, and tribunals usually have greater discretion in comparison with court judges to make alternative and original decisions to allow the production of evidence. As established by national doctrine, this is mostly due to the fact the ultimate goal of arbitrators is to find the material truth behind the parties’ allegations, in spite of procedural aspects.
In practical terms, this means that arbitrators can determine, for instance, that a party presents documents at an earlier or later stage of the procedure; or that a certain type of evidence (such as documentary or testimonial) is produced before the technical evidence; or even that international requirements are applied to a domestic arbitration, such as cross-examination (as discussed earlier), party-appointed expert witness, depositions, and even the adoption of the Redfern Schedule for document production.
Furthermore, a request by one party for production of documents by its adversary is more widely admitted in arbitration than in court procedures. This is partly because the duty to cooperate, which derives from the nationally established principle of good faith, is more intensely applied in arbitration. But it is not only the parties who are subject to the duty to cooperate: arbitrators are too, and must therefore assist the parties in obtaining a specific document or information that is essential to resolving the conflict.
Nevertheless, this does not mean that an arbitral tribunal should admit requests for production of documents indiscriminately. A request can be analysed according to international guidelines (such as the IBA Guidelines or UNCITRAL Model Law), considering criteria such as (1) the relevance of the requested document, (2) the materiality of the document, (3) the specificity of the document, (4) proportionality and (5) non-privilege of one of the parties.
If the request is admitted, the refusal of the requested party to present the document may lead the tribunal to seek enforcement before judicial courts, since, according to the Brazilian Arbitration Law, arbitrators are not competent to enforce orders.
Alternatively, if the party’s refusal is justified by confidentiality issues, the tribunal may demand that the party presents the full document to the arbitrators and an edited version to the requesting party, providing to the latter only those parts of the document that are essential for clarification of the specific allegation. Finally, the tribunal may also draw adverse inference from the allegation that is related to the requested document, although this is less common in domestic arbitration.
As has been discussed, arbitration proceedings held in Brazil can be influenced by domestic litigation rules. Even with the efforts of the parties and arbitrators to free themselves of domestic procedural laws, establishing the arbitration as an independent field of procedure, the Brazilian Code of Civil Procedure remains a strong source of influence.
These interactions with national legislation have both advantages and disadvantages. For the purposes of this chapter, we focus on a particular concern, namely issues pertaining to the production of expert evidence.
As in most countries with a civil law tradition, Brazil’s Code of Civil Procedure establishes that a tribunal-appointed expert must produce a technical report. In this situation, the judge should nominate an expert that he or she trusts, who should thereafter work alongside the parties and their own experts – to assist counsel with any work outside their area of expertise – to produce an official technical report.
The first problem in these circumstances is the number of experts incurring expense for the parties. Not only will the parties have to bear the costs of their own experts, who are indispensable for the proceeding, they will also need to pay for the expenses incurred by the expert nominated by the judge – or arbitrator, as this approach is commonly adopted in domestic arbitration. Second, instead of each party presenting its own technical reports with its memorials (during the pleading phase), there will be another stage of the proceeding specifically for the technical evidence to be presented, as proposed by the expert appointed by the tribunal. In general, arbitration can take up to six months longer when this method of presentation of technical evidence is used. Further, the tribunal-appointed expert is usually chosen from a list that does not necessarily include the most capable or best-informed professionals on the specific topic, and who may also attempt to form his or her own opinions on a particular subject.
International arbitration practice is different. The emphasis is on the cross-examination and focusing on the right of the parties to obtain evidence, and technical reports are usually produced by party-appointed experts.
If this is the case, instead of the arbitrator nominating an expert, each party will appoint its own expert, who will prepare individual technical reports. In some situations, and particularly during cross-examination, party-appointed experts will even play the part of technical witnesses, answering questions from both the parties and the arbitrators. As pointed out by Professor Carlos Alberto Carmona, one of Brazil’s most prominent lawyers in this field, this may be seen as an interesting alternative to the exclusion of tribunal-appointed experts, as is so often the case in domestic arbitration in Brazil, outlining that arbitral proceedings should not be influenced by national procedural law. As has been discussed, this is not the usual process in Brazil – in view of the influence of national legislation – but as arbitration procedures develop, the removal of tribunal-appointed experts may become a normal part of proceedings.
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