Kenix Yuen participates in the IR Global Virtual Series - Fairness & Impartiality: Are witnesses truly independent in your jurisdiction?

Published 19 June 2020 by Gall Solicitors

Foreward by Andrew Chilvers

Global commerce is by its nature a complex beast and it is inevitable that sometimes disputes arise between companies doing business across the world.

As more international deals are signed off – often in greater degrees of complexity than will have been done in the past – it has also led to a rise in the number of disputes that end in arbitration.

Indeed, international arbitration was the preferred method of dispute resolution for 97% of respondents in the 2018 International Arbitration Survey, conducted by the School of International Arbitration at Queen Mary University of London, in association with White & Case LLP.

Moreover, 99% of respondents said they would recommend international arbitration to resolve cross-border disputes in the future – which shows the strength of the system across the world.

An important aspect of the arbitration process is the use of the expert witnesses. There are few cases where an expert witness is not called on to give evidence on a range of technical, financial, legal and, on occasion, scientific issues to help the arbitration tribunal to understand evidence on complex matters and help them form a decision.

Those involved in disputes must be aware of how expert – and also fact – witnesses are used in different jurisdictions, as this can vary markedly between territories.

How important are cross cultural issues regarding arbitration rules and witnesses in your jurisdiction?

In my experience, practitioners and tribunal members from different jurisdictions (in particular, having different legal systems) have different interpretations of the arbitration rules, which are somehow influenced by their court procedures.

In my practice, I always encounter cross cultural issues concerning the differences in legal system, practice culture, professional code of conduct, language between Hong Kong and Mainland China, which are important in stakeholders’ expectation and legal risks management.

For instance, from the aspects of costs recovery, many arbitration rules are unclear or give the tribunal a wide discretion as to what costs incurred by the winning party can be recovered from the losing party. Very different from Hong Kong parties, Mainland Chinese parties who are inexperienced in international arbitrations may not expect that the winning party can also recover fees paid to the winning party’s lawyers, in addition to other arbitration costs.

I recently also encountered a Hong Kong (HK) seated arbitration about a shareholders’ dispute in which all parties involved were Mainland Chinese parties. The opponent’s Chinese lawyers act for the shareholders of the other camp and the company from which the dispute arose. Apparently, even if there is no actual conflict, there is a potential conflict and the HK professional code of conduct (only applies to HK lawyers) prohibits us from putting ourselves into this situation. The Tribunal acknowledged the potential conflict but ruled that this was out of the Tribunal’s jurisdiction to rule on this question and the arbitration rules indeed allowed the parties to choose their legal representatives.

Witnesses from other jurisdictions have a different perception and understanding of the law. In Hong Kong, we see more often than before that parties in dispute tend to commence contempt proceedings against the other sides’ witnesses for knowingly making false statements. Those witnesses (especially those from Mainland China) are surprised that civil litigations can potentially lead to criminal penalty.

How important is witness independence when attempting to solve complex, transnational disputes? What roles can practitioners play to test for independence?

I would say that one can fairly expect that witnesses who give evidence for one party are not entirely independent. Expert witnesses would be more independent because they usually abide by professional rules. In HK arbitrations, experts are used to stating their agreement to the code of conduct for experts similar to those in our court rules (although it is not a must) in the expert reports. The code of conduct includes the duty to be impartial. In general, I think practitioners are well trained in finding out the truth by asking the right questions and paying attention to details. Regardless of whether the witness is giving evidence for the other side and the client’s side, we always stay alert in reading/obtaining evidence, identifying gaps and asking the right questions.

Although IBA rules are not binding internationally, how important are they for arbitration rules in your jurisdiction?

The IBA rules are highly regarded in HK arbitrations. Even if the parties have not agreed to adopt rules on evidence in the arbitration agreement, tribunals usually welcome such suggestion to adopt the IBA rules on the taking of evidence in international arbitrations. In the event that there are uncertainties in the applicable arbitration rules, international practice (like the IBA rules and commentaries) is relevant and tribunal does take it as reference.