Why Construcion Arbitration is Complex? (XV)

Evidence in Construcion Arbitration

Why are so many construction arbitrations won or lost before the hearing even begins?

Evidence is one of the most complex aspects of any arbitration, especially construction arbitration.

Evidence is "the procedural activity carried out by the parties before the court with the aim of convincing the judge of the truth of a statement or establishing it as true for the purposes of a proceeding”, a definition that is also valid for arbitration.

In Spanish law, there are no principles or rules establishing how evidence should be assessed, and the principle of free evaluation of evidence according to sound judgement prevails.

The way to check that the evidence has been assessed correctly is through the reasoning behind the judgement, which will show the reasons that convinced the judge to accept the reality or veracity of certain facts. This process is simplified by what is known as the joint assessment of evidence.

Other legal systems define what the object of the evidence should be. For example, in France, evidence must be relevant and subject to cross-examination, and in England and Wales, evidence must be admissible and relevant.

In arbitration, the principles and guidelines contained in the IBA Rules on the Taking of Evidence in International Arbitration are often used, which state that "the Arbitral Tribunal shall determine the admissibility, relevance, usefulness and value of the evidence".

It can be said that, in the field of international arbitration, there is general agreement, both in common law and civil law jurisdictions, that evidence must be (i) relevant or connected with the right claimed, (ii) material to the determination of the case, and (iii) legally admissible.

We will review some of the particularities of the main means of evidence in construction arbitration.

Documents

The IBA Rules of Evidence define documents as "a writing, communication, photograph, design, programme or data of any kind, whether on paper, electronic, audio, visual or any other medium".

Documents are the main means of evidence in construction disputes because they enable arbitrators to reconstruct the circumstances of the case when dealing with events that have unfolded over a long period of time.

In such cases, hundreds or thousands of documents of all types and formats are produced, and it is vital for the smooth running of the proceedings and for the parties to be able to prove their case that these documents are handled correctly.

When managing documents, it is also necessary to consider whether the arbitration will be conducted under common law or civil law principles, as this will determine how the arbitrators will assess this evidence.

In the civil law system, documentary evidence is much more important than witness testimony. However, in the common law system, witness testimony is considered indispensable.

Regarding the abundance of documentary evidence, the ICC Report recommends that the tribunal request that only those documents that are directly relevant to the issues under discussion be submitted and that they be limited to those that the parties consider necessary to prove their case.

The indiscriminate production of irrelevant documentation, which only serves to confuse the parties and the court, generate more costs and may dilute the arguments of the party acting in this way, should be avoided.

It is also important to use an electronic document management system because, nowadays, during the execution phase of a project, it is very common for all documentation to be exchanged electronically.

When this is the case, it is more practical for documents to be delivered electronically rather than in bulky paper format. It is necessary to consider where such documentation will be stored, how each party's documents will be coded, and that they are in a format that allows for keyword searches.

There is an ICC report with recommendations for managing the production of documentation in electronic form and also a protocol from the Chartered Institute of Arbitrators for the same purpose.

There is no definitive opinion on how documents should be submitted. Lawyers and arbitrators working in a civil law system are accustomed to documents being submitted together with the statement of claim, response, counterclaim and response to the counterclaim.

Requests for the other party to produce documents that have not been accompanied by such pleadings are not very common in this system and are subject to considerable limitations. However, professionals working in the common law system are accustomed to making such requests for the production of documents to the other party during the discovery phase.

In international arbitration practice, there is a certain consensus that requests for the production of documents are admissible to a more limited extent than common law discovery, provided that the categories of documents requested are sufficiently specified and identified and that it is demonstrated why the requested documents are relevant and important and are not already in the possession of the requesting party. This is reflected in the IBA rules of evidence governing document production, but with a limited scope.

In order to be able to submit the requested documentation and prevent the arbitral tribunal from reaching a negative conclusion due to the failure to provide a requested document, it is essential that, in the pre-litigation phase, both the construction team and the client's team manage the documentation that is generated in order to document all events. It is especially useful to keep proof that all the requirements of the contract have been met in terms of notifications in form and time, so that preclusion cannot be claimed later.

Good management of the construction documentation is therefore essential and will also serve to substantiate the claim of the claimant or the defence of the defendant.

In practice, so-called lists or schedules are often used to manage requests for the production of documents. These are tools that allow each party to control the documents they request.

The best known and most widely used tool for document production is the Redfern Schedule, which is a table in which each party identifies the documents it requests from the other party, with an explanation of their relevance. The requested party makes comments or objections on the same document, which are in turn answered by the requesting party, and finally, the arbitral tribunal decides on the admissibility of the request.

The Armesto Schedule can also be used, which aims to make the document production phase more efficient and uses a different format, but with the same philosophy of justifying the request for document production, objections from the other party and the decision of the arbitral tribunal.

These schedules should not be confused with the Scott Schedule used in the Anglo-Saxon system for a different purpose, as it is a document that collects the evidence available to a party, together with its economic valuation.

More on evidence in construction arbitration to follow in next articles.