Factual witnesses in commercial arbitration

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factual witnesses

The recent Sun Yang case has brought the role of factual witnesses in international arbitration into the spotlight. As one of the factual witnesses, Sun Yang’s mother refused to answer questions directly, and also provided inconsistent testimony during the hearing. This witness’s behaviour had significant negative impacts on the case.

In commercial arbitration, the claimant and the respondent shall each provide evidence for the facts on which they apply, reply or counterclaim. Witness testimony often plays an indispensable role in providing facts and restoring the truth of a case. This article takes the practice of the China International Economic and Trade Arbitration Commission (CIETAC) as an example to outline the responsibilities and procedures for taking the evidence of a factual witness.

Meanwhile, the authors will compare the jurisprudence and practices regulating the factual witness with such popular procedural rules as the IBA Rules on the Taking of Evidence in International Arbitration (2010) (IBA rules) and the Rules on the Efficient Conduct of Proceedings in International Arbitration (2018) (Prague rules).

Roles and responsibilities of factual witnesses

According to article 8 of the CIETAC Guidelines on Evidence, any person capable of proving the relevant facts of the case may appear as a witness, including a party’s employee, representative or agent. The witness statement shall contain the name and address of the witness, his/her relationship with the parties, his/her background, a detailed description of the facts related to the dispute, the sources of the witness’s information, the date of the witness’s statement and the signature of the witness.

Generally, a factual witness shall provide related facts of the controversy to assist the tribunal to form the whole picture of the facts. Subjective or legal opinions shall not be provided by the factual witness.

In practice, factual witnesses help the tribunal to determine the different weights of the narratives. Testifying a factual witness during a hearing is essential to highlight the core facts and degrade the credibility of the counterparty’s factual witness, such as by proving their witness’s testimony contains memory mistakes or prejudicial evidence. Nonetheless, a factual witness can be even more vital if some detailed facts of a case cannot be directly proved by documents (for example, the purchase agreement of a software might be completed through the simple delivery of a hard disk).

Rules of proceedings of factual witnesses

Practically, the written witness statement is usually drafted under the guidance of a lawyer. Therefore, when the different versions of narratives are in serious conflict, the factual witness’s appearance at the hearing for examination becomes crucial for the tribunal to confirm the truth. During the hearing, the parties and the tribunal can question the factual witness to further examine his/her credibility.

Article 8.2 of the CIETAC Guidelines on Evidence requests that the factual witness shall submit a written statement prior to the hearing. The statement shall be exchanged between the parties through the Arbitration Court of CIETAC, or by other consented methods. In this way, the tribunal and the parties save the hearing time and improve the efficiency of the hearing. The written statement also has the function of fixing the evidence and avoiding evidence ambush.

In principle, the factual witness should appear in person at the hearing, or by way of videoconference, and be questioned by the party who calls on him/her, and also by the opposing party. However, in order to prevent undue influence, he/she cannot participate or listen to other witnesses’ testimonies, or other arbitral procedures of the hearing.

Usually, the factual witness should briefly introduce himself/herself and then be examined by both sides. The tribunal may ask questions, too. After his/her testimony, the witness shall sign his/her testimony record on the spot. The statement of a witness who fails to appear at the hearing for examination without good cause shall not independently serve as the basis for the establishment of any related fact.

Major differences between IBA rules, Prague rules and CIETAC Guidelines on Evidence

Neither the IBA rules, the Prague rules, nor the CIETAC Guidelines on Evidence are an integral part of any arbitration rules. Their applications are subject to the parties’ consent in a particular case. However, although they cannot regulate the parties in every arbitration case directly, they act as important references in the process of evidence submission, acceptance and examination in both domestic and international arbitrations.

The IBA rules originated from witness practice under the common law system, and were concluded after widely soliciting views from different jurisdictions. The rules provide guidelines for people from different legal backgrounds to engage in international arbitration, and have wide influence in practice.

Since the IBA rules absorb mainly the characteristics of adversary under the common law, they emphasize the initiative of parties in obtaining and presenting evidence. For example, the factual witness oral testimony is mainly conducted through cross-examination between lawyers, and the parties decide the witness list to appear in the hearing.

On the other hand, the Prague rules reflect the pursuit of efficiency of arbitration procedures in civil law countries. The Prague rules do not exclude cross-examination, and put more weight on the arbitration tribunal but not on the parties, emphasizing that the tribunal always has full control over the hearing.

Nevertheless, considering the needs of international arbitration practices in China, the CIETAC Guidelines on Evidence represent an eclectic mix of common law and civil law practices. The guidelines absorb the practice of evidence rule and document disclosure under the common law, while making adjustments based on Chinese judicial experience.

It is possible to glimpse some differences between the three rules by comparing the different consequences of witnesses not appearing for examination at the hearing. As for the IBA rules, according to article 4.8, if the appearance of a witness has not been requested, none of the other parties shall be deemed to have agreed to the correctness of the witness’s evidence-in-chief, i.e., the written witness statement.

As for the Prague rules, article 5.8 authorizes the arbitral tribunal to give as much evidential value to the written witness statement as it deems appropriate under any decision not to call that witness. The CIETAC Guidelines on Evidence do not completely exclude the evidential value of a non-appearing witness’s statement. Article 21 stipulates that the statement of a witness who fails to appear to testify at the hearing shall not independently serve as the sole basis for ascertaining the fact. The guidelines are made based on the inquisitorial judicial traditions of China, where many factual witnesses are unwilling, or even fear, to testify in person.

There are currently many different regulations, rules and discrepancies, in practice, in terms of the procedure of factual witnesses in commercial arbitration. The key to solving the problem is that the arbitral tribunal must be impartial and independent, and seek to improve effectiveness under the premise.

The arbitral tribunal needs to arrange relevant witness procedures according to the judicial background of the parties and arbitrators, taking into consideration the nature and applicable law of the case.

Jin Xi is assistant secretary-general, CIETAC South China Sub-Commission, and Xu Rui is JD&JM candidate at the School of Transnational Law, Peking University

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