E-Discovery and ADR – Yes It Matters E-Discovery and Arbitration – Controlling the Monster...

E-Discovery and ADR – Yes It Matters

E-Discovery and Arbitration – Controlling the Monster

Sponsored by:

New Jersey State Bar Association Dispute Resolution SectionJustice Marie Garibaldi ADR Inn of Court

New Jersey Association of Professional Mediators

February 10, 2011

Peter L. Michaelson, Esq., F.C.I.Arb.Attorney, Arbitrator and Mediator

Michaelson and Associates1161 Broad Street, Suite 118Revmont Park, South Building

Shrewsbury, New Jersey 07702 US

Tel: 732-542-7800Fax: 732-542-7858

E-mail: [email protected]/mich.html

P.L. Michaelson, Esq. – title slide © 2011, P.L. Michaelson, Esq.

All rights reserved

UNCITRAL Arbitration Rules (as revised in 2010)

Section III. Arbitral proceedings

Evidence

Article 27...

3. At any time during the arbitral proceedings the arbitral tribunal may require the parties to produce documents, exhibits or other evidence within such a period of time as the arbitral tribunal shall determine.

P.L. Michaelson, Esq. -- slide 1

American Arbitration Association Commercial Arbitration Rules (as of September 1, 2007)

Rule R-31 Evidence

...

(a) The parties may offer such evidence as is relevant and material to the dispute and shall produce such evidence as the arbitrator may deem necessary to an understanding and determination of the dispute. Conforming to legal rules of evidence shall not be necessary. ...


International Institute for Conflict Prevention & Resolution (CPR)

Non-Administered Arbitration Rules(effective November 1, 2007)

11. Discovery

The Tribunal may require and facilitate such discovery as it shall determine is appropriate in the circumstances, taking into account the needs of the parties and the desirability of making discovery expeditious and cost-effective. ...

12. 3 The Tribunal, in its discretion, may require the parties to produce evidence in addition to that initially offered. ...


Federal Arbitration Act (9 USC §§1 et seq)

Section 10

(a)In any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration ---

...(3) Where the arbitrators were guilty of misconduct in refusing ... to hear evidence pertinent and material to the controversy, or of any other misbehavior by which the rights of any party have been prejudiced.


ICC – Techniques for Controlling Time and Costs in ArbitrationReport from the ICC Commission on Arbitration (2007)

On average, the costs in these ICC arbitration cases were spread as follows: Costs borne by the parties to present their cases: 82% (including, as the case may be, lawyers’ fees and expenses, expenses related to witness and expert evidence, and other costs incurred by the parties for the arbitration other than those set forth below) Arbitrators’ fees and expenses: 16% Administrative expenses of ICC: 2%

It follows that if the overall cost of the arbitral proceedings is to be minimized, special emphasis needs to be placed on steps aimed at reducing the costs connected with the parties’ presentation of their cases. Such costs are often caused by unnecessarily long and complicated proceedings with unfocused requests for disclosure of documents and unnecessary witness and expert evidence. Costs can also be unnecessarily increased when counsel from different legal backgrounds use procedures familiar to them in a manner that leads to needless duplication.

The increasing and, on occasion, unnecessary complication of the proceedings seems to be the main explanation for the long duration and high cost of many international arbitrations. The longer the proceedings, the more expensive they will be.


Muscular arbitrator =

WUSS


Sedona Conference – Cooperation Proclamation

Cooperation in Discovery is Consistent with Zealous AdvocacyLawyers preparing cases for trial need to focus on the full cost of their efforts – temporal, monetary, and human. Indeed, all stakeholders in the system – judges, lawyers, clients, and the general public – have an interest in establishing a culture of cooperation in the discovery process. Over-contentious discovery is a cost that has outstripped any advantage in the face of ESI and the data deluge. It is not in anyone’s interest to waste resources on unnecessary disputes, and the legal system is strained by “gamesmanship” or “hiding the ball,” to no practical effect. The effort to change the culture of discovery from adversarial conduct to cooperation is not utopian. It is, instead, an exercise in economy and logic. Establishing a culture of cooperation will channel valuable advocacy skills toward interpreting the facts and arguing the appropriate application of law.

The Road to Cooperation – a paradigm shift for the discovery process Awareness of the need for cooperation coupled with a call to action Commitment – developing a detailed understanding and full articulation of the issues and

changes needed to obtain cooperative fact-finding Tools – developing and distributing practical “toolkits” to train and support lawyers and

others involved in techniques of discovery cooperation, collaboration and transparency. Components include training programs tailored to each stakeholder; a clearinghouse of practical resources, including form agreements, case management orders, discovery protocols, etc.; court-annexed e-discovery ADR with qualified counselors and mediators, available to assist parties of limited means, ...


Further Sedona Conference papers in the program materials:

1. Supplement to Vol. 10 of the Sedona Conference Journal (Fall 2009)

2. Commentary on Proportionality in e-discovery (Fall 2010)

3. Commentary on Inactive Information Sources (July 2009)

4. Best Practices Guidelines for Managing Information and Records (Nov. 2007)

5. Achieving Quality in E-Discovery Process (May 2009)

6. Report on Legal Holds (Sept 2010)


CCA Protocols (2010)

Protocols for Arbitration Providers (page 45)

3. Develop and publish rules that provide effective ways of limiting discovery to essential information

(general discovery)

“Because discovery is usually the chief determinant of arbitration cost and duration, and because arbitration procedures that leave parties and arbitrators significant "wiggle room“ often result in litigation like discovery, provider institutions should develop and ‐publish procedures that give business users the ability to effectively limit the scope of discovery in arbitration through their pre ‐dispute agreement. As a general matter, discovery should be restricted to information that is material and not merely relevant. Among the possible approaches to limiting discovery:

limiting document production to documents or categories of documents for which there is a specific, demonstrable need; requiring parties to describe requested documents with specificity, explain their materiality, assure the tribunal they do not have the documents, and make clear why they believe the other party has possession or control of the documents;

prohibiting requests for admission, and instead encouraging party representatives to confer regarding stipulation of facts;

prohibiting form interrogatories and limiting the number of interrogatories;

setting limits on the number and length of depositions, and limiting arbitrator discretion to authorize additional depositions to situations where there is a demonstrated need for the requested information, there are no other reasonable means of obtaining the information, and the request is not unduly burdensome to other parties;

directing parties to cooperate on voluntary information exchange/discovery;

directing arbitrators to manage discovery disputes as expeditiously as possible (e.g., by offering to resolve issues through prompt conference calls before resorting to extensive briefing and written argument);

authorizing arbitrators to consider, when awarding fees and costs, the failure of parties to cooperate in discovery and/or to comply with arbitrator orders, thereby causing delays to the proceeding or additional costs to other parties.”



Protocols for Arbitration Providers (page 46)

(e-discovery)

Special attention should be given to detailed procedures for managing electronic records and handling electronic discovery much more efficiently than is currently done in federal and state courts. At a minimum, the description of custodians from whom electronic discovery can be collected should be narrowly tailored to include only those individuals whose electronic data may reasonably be expected to contain evidence that is material to the dispute and cannot be obtained from other sources.

In addition to filtering data based on the custodian, the data should be filtered based on file type, date ranges, sender, receiver, search term or other similar parameters.

Normally, disclosure should be limited to reasonably accessible active data from primary storage facilities; information from back up tapes or back up servers, cell phones, PDAs, ‐ ‐voicemails and the like should only be subject to disclosure if a particularized showing of exceptional need is made.



Protocols for Outside Counsel

(page 63)

Cooperate with opposing counsel on procedural matters. If saving time and money is an important client goal in the arbitration, counsel should make clear to the client that the fullest benefits of time and cost saving (i.e., those concerning procedures ‐ ‐for preparing for and conducting the hearing) can ordinarily only be achieved when opposing counsel cooperate fully and freely with each other and with the arbitrator to achieve those benefits.

(page 64)

Seek to limit discovery in a manner consistent with client goals.Make clients aware that ordinarily discovery in arbitration will be much more limited than in litigation, even in the absence of clear rules and guidelines, and cooperate with opposing counsel and the arbitrator in looking for appropriate ways to limit or streamline discovery in a manner consistent with the stated goals of the client.



Protocols for In-house Counsel (page 26)

Since the most critical factor in the cost and length of litigation or arbitration is nearly always the scope of discovery, parties seeking efficiency and economy in arbitration must make it clear that discovery in arbitration is not for the litigator who will leave no stone unturned.

The first and by far the best opportunity for business users to place meaningful limits on discovery is in the arbitration agreement or incorporated arbitration procedures. There are a number of ways in which arbitration provider institutions' procedures might limit discovery . A pre dispute agreement, ‐while not always achievable, is more likely to produce favorable results since post dispute it is much ‐more difficult to achieve consensus.

A second opportunity occurs when a dispute arises and outside counsel is retained. At this point, in‐house counsel may promote discovery limits by acknowledging that, while scaling back on discovery carries some risk that some significant evidence may not be found, the client is prepared to accept that risk in order to secure the greater benefit of a process that is substantially faster and less expensive than litigation. Inside and outside counsel should thoroughly discuss the cost versus benefit of various courses of discovery that might be pursued in the arbitration and memorialize in writing the client's decision concerning the nature and extent of discovery it wishes to initiate. If business users have failed or been unable to avail themselves of either of the first two opportunities, it may still be possible to convince the arbitrator(s) to limit the scope of discovery.



Protocols for Arbitrators (page 72)

Streamline discovery; supervise pre hearing activities‐ .Arbitrators should make clear at the preliminary conference that discovery is ordinarily much more limited in arbitration than in litigation and should work with counsel in finding ways to limit or streamline discovery in a manner appropriate to the circumstances. ...

They should keep a close eye on the progress of discovery and other preparations for the hearing and should promptly resolve any problems that might disrupt the case schedule (usually through a conference call preceded by a jointly prepared email outlining the ‐nature of the parties' disagreements and each side's position with regard to the dispute, rather than formal written submissions) .


ICDR Guidelines for Arbitrators Concerning Exchanges of Information

Introduction

While arbitration must be a fair process, care must be taken to prevent the importation of procedural measures and devices from different court systems, which may be considered conducive to fairness within those systems, but which are not appropriate to the conduct of arbitrations in an international context and which are inconsistent with an alternative form of dispute resolution that is simpler, less expensive and more expeditious....

Unless the parties agree otherwise in writing, these guidelines will become effective in all international cases administered by the ICDR commenced after May 31, 2008 and may be adopted at the discretion of the tribunal in pending cases.


ICDR Guidelines for Arbitrators Concerning Exchanges of Information

1. In GeneralThe tribunal shall manage the exchange of information among the parties in advance of the hearing with a view to maintaining efficiency and economy.

2. Documents on which a Party ReliesParties shall exchange, in advance of the hearing, all documents upon which each party intends to rely.

3. Document in the Possession of Another PartyIn addition to any disclosure pursuant to paragraph 2, the tribunal may, upon application, require one party to make available to another party documents in the party’s possession, not otherwise available to the party seeking the documents, that are reasonably believed to exist and to be relevant and material to the outcome of the case.

4. Electronic DocumentsWhen documents are to maintained in electronic form, the party in possession of such documents may make them available in the form (which may be paper copies) most convenient and economical for it, unless the Tribunal determines ... that there is a compelling need for access to the documents in a different form. Requests for documents maintained in electronic form should be narrowly focused and structured to make searching for them as economical as possible. ...

8. Cost and Compliance... the Tribunal shall require a requesting party to justify the time and expense that its request may involve, and may condition granting such a request on the payment of part or all of the cost by the party seeking the information.


IBA Rules on the Taking of Evidence in International Arbitration

Article 2 Consultation on Evidentiary Issues1. The Arbitral Tribunal shall consult the Parties at the earliest appropriate time in the proceedings and invite them to consult each other with a view to agreeing on an efficient, economical and fair process for the taking of evidence.

Article 3 Documents1. ... each Party shall submit to the Arbitral Tribunal and to the other Parties all Documents available toit on which it relies, including public Documents and those in the public domain, except for any Documents that have already been submitted by another Party.

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.

3. A Request to Produce shall contain:(a) (i) a description of each requested Document sufficient to identify it, or(ii) a description in sufficient detail (including subject matter) of a narrow and specific requested category of Documents that are reasonably believed to exist; in the case of Documents maintained in electronic form, the requesting Party may, or the Arbitral Tribunal may order that it shall be required to, identify specific files, search terms, individuals or other means of searching for such Documents in an efficient and economical manner;(b) a statement as to how the Documents requested are relevant to the case and material to its outcome; and (c) (i) a statement that the Documents requested are not in the possession, custody or control of the requesting Party or a statement of the reasons why it would be unreasonably burdensome for the requesting Party to produce such Documents, and (ii) a statement of the reasons why the requesting Party assumes the Documents requested are in the possession, custody or control of another Party.

12. With respect to the form of submission or production of Documents: ... (b) Documents that a Party maintains in electronic form shall be submitted or produced in the form most convenient or economical to it that is reasonably usable by the recipients, unless the Parties agree otherwise or, in the absence of such agreement, the Arbitral Tribunal decides otherwise;


CIArb Protocol for E-Disclosure in Arbitration

Early consideration1. In any arbitration in which issues relating to e-disclosure are likely to arise the parties should confer at the earliest opportunity regarding the preservation and disclosure of electronically stored documents and seek to agree the scope and methods of production.

Request for disclosure of electronic documents4. Any request for the disclosure of electronic documents shall contain:(i) a description of the document or of a narrow and specific requested category of documents;(ii) a description of how the documents requested are relevant and material to the outcome of the case; (iii) a statement that the documents are not in the possession or control of the party requesting the documents; and(iv) a statement of the reason why the documents are assumed to be in the possession or control of the other party.



Order or direction for disclosure of electronic documents5. In making any order or direction for e-disclosure, or for the retention and preservation of electronic documents, the Tribunal shall have regard to the appropriate scope and extent of disclosure of electronic documents in the arbitration, whether under the agreed arbitration rules, the arbitral law, any agreed rules of evidence (for example, the IBA Rules for the Taking of Evidence in International Commercial Arbitration) and this Protocol. The Tribunal shall have due regard to any agreement between the parties to limit the scope and extent of disclosure of documents.

6. In making any order or direction for e-disclosure the Tribunal shall have regard to considerations of:(i) reasonableness and proportionality;(ii) fairness and equality of treatment of the parties; and(iii) ensuring that each party has a reasonable opportunity to present its caseby reference to the cost and burden of complying with the same. This shall include balancing considerations of the amount and nature of the dispute and the likely relevance and materiality of the documents requested against the cost and burden of giving e-disclosure.



Production of electronic documents8. Production of electronic documents ordered to be disclosed shall normally be made in the format in which the information is ordinarily maintained or in a reasonably usable form.

9. A party requesting disclosure of metadata in respect of electronic documents shall be required to demonstrate that the relevance and materiality of the requested metadata outweigh the costs and burdens of producing the same, unless the documents will otherwise be produced in a form that includes the requested metadata.

Procedure and costs10. The Tribunal shall consider the appropriate allocation of costs in making an order or direction for e-disclosure.

14. In the event that a party fails to provide disclosure of electronic documents ordered to be disclosed or fails to comply with this Protocol after its use has been agreed by the parties and the Tribunal or ordered by the Tribunal, the Tribunal shall be entitled to draw such inferences as it considers appropriate when determining the substance of the dispute or any award of costs or other relief.


E-Discovery and ADR – Yes It Matters E-Discovery and Arbitration – Controlling the Monster...

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