REUTERS | Carlos Garcia Rawlins

Memorials v pleadings: how to pick the winning approach for your arbitration

So you’ve settled your jurisdictional turf war, stayed court proceedings in favour of arbitration and finally have a conflicts-free tribunal. The next major tussle is likely to be over the procedure to be followed in the arbitration. Of the various issues to be determined, there is probably no more consequential decision than that of whether to adopt a procedure based around continental-style memorials or common law-style pleadings. Although the memorial approach is becoming increasingly common in commercial arbitrations, it is also not unusual for a pleadings approach to be followed and it is important for practitioners to understand the differences and to think critically about which approach is appropriate for their case.

This post briefly sets out the background to the debate, considers the arguments for each approach and provides some strategic considerations for determining which approach to follow.

Dispute

The memorial approach typically requires the parties to set out their claim or defence (as the case may be) in full in their respective statement of case. This means setting out all of the evidence and arguments of fact and law, and appending all of the documents, witness statements, expert reports and legal authorities that are relied upon.

In the pleadings approach, the parties tender briefer submissions setting out the factual basis for their claim, but not necessarily appending witness or expert evidence, or making detailed submissions of law. Once the pleadings have closed, the parties then go through successive stages of exchanging documentary, witness and expert evidence with submissions on the law often reserved for the parties’ opening statements.

Submissions

Proponents of the memorial approach argue that it is quicker and more efficient to require parties to put all their cards on the table upfront. This ensures that there is less opportunity for a party to be “blindsided” at a late stage of the proceeding. It also decreases the likelihood of a party simply advancing a skeleton case as a try-on in the hope that further evidence emerges down the line to bolster its claims. It could also be argued that having to advance a case up front is more likely to make a party properly evaluate the strength of its case at an earlier stage, which could be conducive to settlement.

Advocates of the pleadings approach argue that it is more efficient for the parties to set out their pleaded cases in full before expert and factual evidence is prepared, so that time and costs are not expended on preparing evidence on issues that may ultimately not be in dispute. It is argued that this approach also minimises the likelihood of an inefficient document production phase, as that process typically follows the close of pleadings (whereas under the memorial approach, it is common for further memorials to be submitted after the close of the document production phase).

Award

Regardless of where an arbitration is seated, which institution is administering it and where the parties, their lawyers and the arbitrators are from, it is up to the parties to agree (and, failing agreement, the tribunal to determine) the procedure governing the arbitration, including whether they wish to follow a memorial or pleading approach (or some hybrid of the two). It is noteworthy, however, that most institutional rules appear to operate on the assumption that a party will serve the documents on which it intends to rely with its pleadings.

Although often written off as a clash between the civil law (memorials) and common law (pleadings) cultures, the reasons for preferring one approach over the other may sometimes turn purely on strategic considerations (some of which are alluded to above). Arbitrators, when faced with this conundrum, will want to focus the parties’ minds on the fact that the driving force should always be achieving the most efficient, expeditious and inexpensive method of determining the dispute.

As such, different disputes may lend themselves to one or the other, and there can be no hard and fast rule as to what should be the preferred approach.

Key considerations may include:

  • Whether the matters in dispute are likely to turn largely on factual or legal issues. If the dispute is largely over matters of fact, it may make sense to adopt a memorial approach so that the parties and the tribunal have the benefit of being able to consider fully and test the parties’ case at each stage.
  • Whether the issues in dispute can be defined in fairly narrow terms or whether they straddle a broader spectrum. If the arbitration straddles multiple disputes or issues, a pleadings approach may assist the parties in defining the issues at an early stage before expending resources on preparing evidence in relation to matters that may become moot.
  • Any inequality in the parties’ positions, for example where one party is at a significant pecuniary or information disadvantage. It may be that a party with deeper pockets will want to adopt the memorial approach as it will force the other party to incur more substantial costs up front. On the other hand, a pleading approach may favour a party who may not have access to all the facts and documents (for example, where individuals responsible for the matter have left the company) and so would prefer to present witnesses evidence when it has a full suite of documents following the document production phase.
  • The parties’ desire for expediency and the potential likelihood of settlement. Where a party has to front-load much of the cost of advancing its case, it may firstly bring any specific strengths or weaknesses in its case into clearer perspective; and secondly, make a party more receptive to pursuing settlement. It is also generally easier to fit a truncated timetable under the memorials approach.

Naturally, various other considerations and permutations may apply. Which approach is therefore the most appropriate will be more obvious once the particular circumstances of the relevant dispute have been considered.

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