Arbitration practitioners are well aware of the inherent difficulties that can arise where important evidence is required from reluctant third parties. Where the evidence in question is pivotal to a party’s case and the witness refuses to give evidence, it can be difficult for that party to make their case either comprehensively or convincingly.
Where a third party witness is initially unwilling to give a witness statement but has critical evidence, the best approach in most cases will be to continue to seek the witness’s voluntary co-operation. However, where the witness remains resistant, the tribunal will not be able to compel them to give evidence in support of the arbitration. If the evidence is vital, recourse to the court system is the only option. There are a range of potential routes that can be pursued in the English courts. In this regard, a recent decision of the English Court of Appeal in A and B v C, D and E (A v C), has made it easier to obtain evidence from reluctant third parties. The case is likely to lead to more applications to the English courts for orders compelling witness evidence in support of arbitrations seated both in England and abroad.
Compelling witness evidence: the English court’s powers
Where the witness is within the jurisdiction and the arbitration is being conducted in the jurisdiction, the English court can require a witness to give live evidence to the tribunal, under section 43 of the English Arbitration Act 1996 (AA 1996). A party seeking the court’s intervention under this provision will require either the agreement of the parties, or the tribunal’s permission. Alternatively, where essential evidence is needed from a witness outside the UK, an application can be made to the English courts to issue a letter of request to a foreign court, to ask that court to take a witness’s evidence.
The English court also has the power to compel a witness inside the jurisdiction to give evidence in support of arbitration seated either inside or outside England, under section 44 of the AA 1996. Subject to some (important) qualifications, section 44 gives English courts the power to make a variety of orders in support of arbitral proceedings. These powers can be exercised irrespective of the seat of the arbitration, including where the seat is yet to be determined. The courts can grant a wide range of orders under section 44, including the taking of evidence from witnesses, along with preserving evidence, preserving property, sale of goods, granting interim injunctions and appointing a receiver.
Until the latest Court of Appeal case, it had been understood that orders under section 44 could never be made against non-parties. The provision had therefore historically been perceived as having limited utility in relation to securing evidence from reluctant witnesses, given that most witnesses are not themselves party to the arbitration in question.
The new Court of Appeal decision
In A v C, A, B, C and D were parties to an arbitration in New York which concerned, among other things, whether certain “signature bonuses” paid by C and D were properly deductible from the amount claimed in the arbitration by C and D, which turned on the nature of the bonuses. A and B were given permission by the tribunal to apply to the English courts to compel E to give evidence on the issue. E was the lead negotiator of the signature bonuses and a non-party to the arbitration who was resident in England.
The application was initially refused by the English Commercial Court, on the basis that orders under section 44 were not available against third parties. On appeal, the Court of Appeal overturned this decision, deciding that an order could in fact be granted against third parties in support of New York arbitral proceedings.
This latest case has clearly widened the range of circumstances in which section 44 of the AA 1996 can be used to obtain important witness evidence. Nonetheless, there remain significant preconditions for a successful application. These need to be met before it will be possible to get an order.
Ingredients for a successful application under section 44
The English courts’ powers under section 44 are supportive of the arbitral process rather than interventionist. Accordingly, the English courts are only able to exercise their powers when absolutely necessary. The courts will not take over the role of the tribunal and unduly interfere with the parties’ choice as to how their dispute will be resolved. The decision in A v C highlights the “thresholds” that must be met in order for the English court to have the power to act under section 44.
- First, the parties must not have agreed in the underlying arbitration agreement to contract out of the court having the powers to act. Section 44 is a non-mandatory provision of the AA 1996 and can be excluded by the parties should they not want the assistance of English courts.
- Second, the English courts can only exercise their powers when the tribunal lacks the power to act, or is unable to act effectively. In the situation involved in A v C, the tribunal had no power to compel E to give evidence in the New York proceedings, given that E was a third party witness.
- Finally, unless there is urgency or agreement between the parties, the party seeking the order must have the permission of the tribunal.
Once these thresholds or gateways are satisfied, whether or not the court grants an order under section 44 is a matter of its discretion as to whether the order is necessary to support the arbitral proceedings. If the English court decides that granting an order is necessary to support the arbitral proceedings, the courts will only have the same powers that they would have in relation to English court proceedings.
Before the decision in A v C, the prevailing position appeared to be that none of the relief available under section 44 could be obtained against third parties. The latest decision is a clear departure from this approach and the English courts now have a greater capacity to assist arbitral proceedings by securing witness evidence. Parties seeking evidence from an unwilling third party witness located within the jurisdiction can now apply to the English courts to compel that evidence under section 44 of the AA 1996.
In addition, it is important to note that orders securing witness evidence are also available under section 44 for foreign seated arbitrations. Somewhat interestingly, this could lead to the situation that the English court may be able to grant orders in support of foreign seated arbitration that it would not be able to grant in support of foreign court proceedings. However, it is worth being aware that, in addition to the general discretion under section 44, section 2(3) of the AA 1996 gives the courts discretion not to grant an order if the fact that the arbitration is seated outside the jurisdiction makes it inappropriate to do so.
Anyone considering seeking the English court’s support in securing third party witness evidence following A v C may wish to consider the following before making their application:
- Applicants should be careful to ensure that they have surmounted the necessary hurdles for the court to have jurisdiction. This will include gaining the necessary permission from the tribunal where the other party has not given consent, unless there is urgency.
- Parties should ensure that any order sought from the court is within the English courts’ powers with regards to English law proceedings.
- The application will usually need to include an explanation of the proceedings, the relevant issues, and why the witness in question has relevant evidence which is needed in order for the dispute to be determined.
- Where parties are seeking support for foreign-seated arbitrations, they should be careful to justify why the English court should exercise its powers in support of the arbitration, instead of this being left to the courts of the seat.
A party should give due consideration to the fact that an order under section 44 is unlikely to be a panacea in every case where a witness is determined not to give evidence. Careful balancing of strategic considerations will be necessary in deciding whether to apply for an order.
Difficulties with unwilling witnesses are a perennial problem in international arbitration and securing their evidence is never straightforward. There are options available in a number of jurisdictions; for example, parties to arbitration have the option of making applications to the US courts for orders compelling witness evidence under the section 1782 provision of the United States Code, though there are conflicting decisions by the US courts in relation to these powers. The English courts’ extension of their powers under section 44 of the AA 1996 has now widened the courts’ ability to compel third party witness evidence and has added the English court to that list of potential jurisdictions to approach for such support. As a consequence, it is likely that there will now be a rise in applications of this kind under section 44 to the English courts in support of both English-seated arbitrations and those seated in other countries, as users of arbitration seek clarity on the orders which can be granted in relation to third party witness evidence, and against third parties more widely. Having said this, orders under section 44 will remain subject to the courts’ discretion. Applications must still overcome all the relevant hurdles, including the court’s exercise of its discretion. Time will tell how many of these applications will be successful.