ILLEGALLY OBTAINED EVIDENCE IN INTERNATIONAL ARBITRATION: EXAMINING THE ADMISSIBILITY
This post is authored by Shubham Gandhi, a third-year student of B.A. LL.B. (Hons.) at Dharmashastra National Law University, Jabalpur.
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In the wake of a pandemic, there has been growing support for online dispute resolution, with proceedings and management of cases going virtual. While the settlement of disputes through virtual mode may have proven cost-effective and time-saving, but it has left the window open for hackers to tamper in million-dollar disputes, risking the confidentiality of parties and public entities.
In this regard, the tangled question of admissibility of illegally obtained evidence (“IOE”) arises when the evidence so leaked or procured is being produced before the tribunal to settle the dispute. For instance, in February 2021, the International Court of Arbitration shelved a multi-billion dollar award over the allegation that the claimant has gained access to the confidential information of 70,000 emails via cyber hacking, with two hackers later admitting to the same.
In this article, the author attempts to highlight the already present rules in international arbitration against IOE, the approach adopted by tribunals by shedding some light on cases on the legality of IOE in arbitration proceedings, and thereby provide a concrete way forward for admission of IOE in the international arbitration regime.
2. INTERNATIONAL ARBITRATION RULES ADDRESSING THE ISSUE
International arbitration rules provide wide discretion to the arbitration tribunal to determine the admissibility of evidence. The International Centre for Settlement of Investment Disputes Arbitration Rules by virtue of Article 34(1) state that “the Tribunal shall be the judge of the admissibility of any evidence adduced and of its probative value”, the same being contained in Rule 19.2 of SIAC Arbitration Rules. Similarly, Article 19(2) of the United Nations Commission on International Trade Law (“UNCITRAL”) Model law dictates that “the power conferred upon the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence”.
In a recent turn of events, the International Bar Association (“IBA”), decided to make its rules in coherence with a digital surge in international arbitration and protect the commercial value of documents involved in the virtual proceedings, and brought a new amendment in the IBA Rules of Taking Evidence in International Arbitration 2020 (“2020 IBA Rules”).
The 2020 IBA Rules under newly embedded Article 9.3 stated that “Arbitral tribunal may, at the request of a party or on its motion, exclude evidence obtained illegally.” The power is solely vested with the tribunal for deciding the fate of illegal evidence. Article 9.2 of the IBA Rules use the word ‘shall’ while declaring grounds of privilege communication, legal impediment and politically sensitive information to be excluded from admission. Moreover, if the tribunal is of the opinion that evidence is obtained illegally by one of the parties, then Article 9.7 will come into the picture, thereby imposing cost and other ramifications made available in rules.
3. APPROACH TOWARDS ILLEGAL EVIDENCE
In one of the earliest judgments of Methanex v. USA, delivered in the year 2005, the NAFTA Chapter Eleven Arbitral held that evidence acquired illegally cannot be weighed in arbitration proceedings as both the parties owe a general duty of care and procedural fairness, to conduct themselves in ‘good faith’ during these arbitration proceedings and to respect the equality of arms between them, as required by Article 15(1) of the UNCITRAL Rules.
Furthermore, in the year 2009, by the case of EDF (Services) Ltd v Romania, the ICSID tribunal held that illegally obtained audio recordings of conversations would constitute a breach of privacy and is against good faith and fairness principles, thereby not admitting the evidence viz. otherwise relevant to the issue.
However, in the year 2012, in the case of Caratube International v Kazakhstan, the ICSID tribunal explicitly admitted 2000 hacked emails from a site called ‘KazakhLeaks’, following a cyberattack on the Kazakh government’s computer network, only due to the fact that the evidence was non-privileged. The tribunal laid down the following reasons for admitting evidence: (i) documents were relevant to dispute (ii) some documents were widely available in the public domain, so no element of privilege or confidentiality can act as a hurdle.
The extent of admissibility of IOE was liberated in the year 2019 in ConocoPhillips v. Venezuela. In this case, Venezuela sought to rely on evidence leaked by WikiLeaks after the award had been rendered. The majority present in the International Centre for Settlement of Investment Disputes (ICSID) tribunal refused to reopen the case as it had been rendered on merit and execution was pending. However, the ‘dissent’ by Prof. Georges Abi-Saab lays down the foundation of the admissibility of IOE. He opined that Venezuela produced glaring evidence, which is crucial to the proceedings, and the said document is already in public. Consequently, he opined that the dispute can be reopened on public policy grounds, as ignoring its existence and relevance would lead to a travesty of justice.
Therefore, over the mixed decisions rendered by various tribunals, the principles of procedural fairness, public interest, privileged communication, and good faith are considered as tenets to determine the admissibility of IOE, and recognized by tribunals in international arbitration.
4. TEST TO DETERMINE THE ADMISSIBILITY OF IOE
One of the renowned academicians in the field of international arbitration, Ms. Cherie Blair has given a two-step admissibility test of IOE, i.e.-
Clean hands Doctrine
Public Interest Doctrine
The doctrine of ‘clean hands’ is a common law principle which states that “no one should be profited from its own misconduct”. If the party to the dispute wrongfully acquires the IOE then they should be precluded from relying on such evidence, as they cannot seek benefit of their own misconduct, as highlighted in the case of Libananco v Turkey, delivered by ICSID.
Obtaining evidence which is otherwise present in the public domain can be used by the party to the proceedings. However, evidence obtained through breaches of international law constitutes a wrongdoing from which the responsible party should not be able to take advantage or receive rights, this inevitably breaches the doctrine of clean hands.
For the purpose of the discussion, a disinterested person, one who does not have any interest in the proceedings, will be considered as a party to the dispute if he acts as a middleman in procuring the evidence, in exchange for money consideration. The same has been held in the case of Caratube v. Kazakhstan, where the ICSID considered a disinterested person a party to the dispute, who for money consideration, adduced illegal evidence.
On the issue of Public interest doctrine, due regard is given to the work of Blair and Gojkovic in IOE vis-a-vis Public interest, which laid down specific questions which should be answered before admitting IOE-
Whether IOE is obtained by a party interested?
Whether public interest favours rejecting the evidence?
Do the interests of justice favour the admission of evidence?
The tribunal in many cases has rejected the admissibility of IOE on grounds of public interest, with no definite precedent to determine the parameters. The author firmly believes that evidence, though obtained illegally, must be admitted into proceedings in order to do absolute justice. The real criteria should be whether the IOE is quintessential to determine the rights of the parties, if yes, then the interest of justice favours the admission and if it is in the nature of supplementing the real evidence, then IOE must be made inadmissible.
5. THE CONFLICT OF LAW CONUNDRUM
It is to be borne in mind that the method adopted to procure evidence might be legal in one country and illegal in another. For example, the law of privileged communication differs from country to country. The general practice adopted by tribunals, with regards to conflict of laws, is to consider the law where the evidence was procured. However, there are instances where the tribunal has undertaken a contrary approach, like in the case of Adamu v. FIFA, where despite the procurement of evidence being legal in England, the tribunal followed the law of arbitration of Switzerland i.e., the seat of arbitration.
The author believes that the Closest Connection Test should be adopted while determining the law of jurisdiction. If the document is the subject matter, then the law of the place where the document was signed, entered into, or created should be considered, and if the question is with regards to the validity of privilege claim, then the law of the domicile of the party claiming the privilege should be applied.
In Hulley Enterprises v. Russia, the Permanent Court of Arbitration ("PCA") has laid down that evidence should be considered as illegally obtained if it was obtained in breach of the law of the place of procurement. Similarly, in Adamu v. FIFA, the Court of Arbitration for Sport ("CAS") held that if evidence is procured by violating the law of the seat, then it should be considered illegal.
6. NASCENT INDIAN JURISPRUDENCE
The admissibility of evidence in arbitral proceedings in India is governed by the Indian Evidence Act, 1872. The sole test to determine the admissibility of IOE is the extent of its relevance. The same has been upheld by the court in the cases of Natwarlal Damodardas Soni and R.M. Malkani. The Supreme court held that IOE must be made admissible, if it is relevant to the dispute, however, it is to be dealt with much care by the court.
The Apex court, while dealing with IOE, also remarked in Pooran Mal v. Director of Inspection of Income Tax, that if no constitutional or statutory construction prescribes exclusion of IOE, then the IOE must be admitted if it is pertinent to the matter. The same dictum has been recently reiterated by the Supreme Court in the Rafael Case.
The rising instances of cyber hacking have resulted in a breach of confidentiality in many cases and subsequently, the scenario of IOE has questioned the international arbitration rules to the very core. The earlier approach of upholding the integrity of the arbitration process and good faith is long gone. Since the rules regarding the admissibility of evidence predominantly rest on the tribunals, the recent decisions, as in the case of ConocoPhillips followed by the decision given in the Caratube case highlights the liberal approach adopted by tribunals in admitting IOE. This approach certainly does not endorse admitting every kind of IOE as the past decisions are clear regarding certain types of IOE that are not admissible, such as privileged documents, hacked evidence by either of the party or politically sensitive content. This has also been recently codified in the amended rules of the IBA.
However, the 2020 IBA Rules are silent on many issues, like in a given case, do either of the parties have the right to challenge the decision of the tribunal admitting IOE, what will be the procedure to challenge and what if the tribunal considered the wrong national law in determining the admissibility of IOE, and finally that can the award be set aside on that ground. The institutional arbitration centres must carve out a scheme, entailing a framework regarding the admissibility of IOE in order to clarify the ambiguities. Moreover, there is a possibility that parties may specify in their contract precluding the admissibility of IOE on any ground as they deem fit by embodying a clause to that effect.