An issue which has cropped up before various tribunals and courts is whether illegally procured evidence, which may even be confidential, is admissible. In international arbitration, there is an absence of rules excluding its admissibility. Generally, tribunals are given broad discretion when it comes to questions of evidence. Particularly in international investment arbitration, there is divergent opinion on whether such evidence is admissible or not. While opinions in Conoco Phillips v. Venezuela have held evidence procured illegally to be admissible to ensure that a party is fully able to present its case, there are contrary opinions rendered by ICSID tribunals in Methanex v. USA where such evidence was considered inadmissible. In international commercial arbitration, there seems to be no reported opinion by tribunals on this issue, which creates several lacunae.
Although investment arbitration decisions do shed some light, they should not be readily imported into commercial arbitration as the parties in the latter are generally private parties, as against a State in the former. While there are opinions from the Court of Arbitration for Sports, these too have generally had a player against a larger body like FIFA or UEFA which could have influenced tribunals. Therefore, when this question comes up before commercial arbitration tribunals, they are brought to discuss it in a vacuum with conflicting concerns of both parties which goes beyond their own dispute into policy questions such as whether a party should be allowed to exercise their right to fully present their case to the extent that possible illegal procurement is condoned.
How do tribunals decide on the admissibility of evidence?
The standard across the Model Law and most major institutional arbitration rules goes into the relevancy and materiality of the evidence. There is an absence of an express bar in arbitration law on illegally procured evidence. If the parties themselves have not decided on how the tribunal is to deal with such questions, tribunals are free to determine the admissibility themselves. Article 9 of the ‘IBA Rules on Taking of Evidence’, which are used as guiding principles by tribunals even when parties do not agree to be bound by them, stipulates that tribunals can admit evidence if it is considered to be relevant and material to the dispute at hand. The threshold of relevancy and materiality is of prima facie relevancy and materiality. The test of relevancy is whether it is related to a contention being made in the proceedings, while materiality refers to the usefulness of the evidence in an arbitrator’s decision. This is complemented by the general purpose of evidence which is to prove a fact on which a party bases its legal argument.
However, in most cases, ICSID tribunals go into other details to determine whether the evidence is to be deemed admissible. They look into aspects such as whether the admitting party procured it illegally themselves or whether the evidence is in the public domain. The first aspect is also known as the ‘doctrine of clean hands’. It stipulates that as long as a party has “clean hands”, i.e. has not itself done any illegal act, the evidence should be considered admissible. The second aspect, particularly considered while dealing with confidential information which was illegally procured, is that if the evidence is already in the public domain and is accessible to the public, it can be admitted.
While a party does have a right to fully present its case, condoning illegal procurement sets bad precedent that a tribunal is not concerned if the party has gone beyond the law to procure it. Even while considering the doctrine of clean hands, situations could arise where parties induce a third party to procure evidence illegally for them. (Such an issue arose in this year’s Willem C Vis Moot problem where a party attempted to purchase confidential information from an intelligence company which allegedly procured it illegally) Therefore, there is a need to consider the future impact of allowing such evidence and these concerns have been accepted by courts in the form of the doctrine of the ‘fruits of the poisonous trees’. This postulates that a party cannot derive benefits from anything which has its origins in an illegal act. This addresses concerns of parties inducing a third party to procure evidence illegally. However, whether this should be given preference over the doctrine of clean hands is still a perplexing question requiring determination.
Another concern which arises in arbitration is the duty of parties in arbitration to arbitrate in good faith. While this has been considered to exclude illegally procured evidence, it could also potentially influence arbitrators to admit evidence if it shows bad faith on part of the other party. Arbitration generally also requires arbitrators to maintain procedural fairness which is fairly undermined if parties are allowed to admit evidence procured illegally. These concerns tilt the scales in favor of not admitting illegally procured evidence in arbitration proceedings.
The present law only provides for a very low threshold of relevancy and materiality in admitting evidence. In the absence of a bar or additional guidance, the mere satisfaction of the test lends admissibility to such tainted evidence. The present test should not be enough to admit illegally procured evidence and tribunals in commercial arbitration must not restrict their investigation to it. It is necessary to venture into aspects like the doctrines of clean hands and fruits of the poisonous trees, the issue of public domain, the confidentiality of the evidence being sought to be produced, the duty to protect procedural fairness and maintain good faith etc. As a rule, there could be a presumption of not admitting illegally procured evidence until it is shown that the evidence is in the public domain or when a party’s ability to fully present its case is jeopardized if it is considered inadmissible. This retains procedural fairness and the duty to arbitrate in good faith unless there is good reason to override them.