Are uniform privilege rules in international arbitration in parties’ best interests?

Authors: Barry Fletcher, James Carter and Anna Mills of DLA Piper 

London International Disputes Week (LIDW) offers great opportunities for delegates from around the world to discuss and debate some of the most pressing issues facing international dispute resolution. This year, the recent report of the IBA Arbitration Committee Task Force on Privilege in International Arbitration [1] (the Task Force) will be a hot topic; ensuring legally privileged information is appropriately protected is a key priority for parties and counsel, but how that can be achieved in international arbitration, where there are often multiple laws in play, is a difficult question.  

The problem 

It is impossible to provide a universal definition of privilege given the different ways in which this concept is treated in jurisdictions around the world. Taking English law as an example, legal professional privilege, broadly speaking, confers an enhanced form of protection over the confidentiality of certain types of communication between a professional legal adviser and their client or, where made in respect of legal proceedings, between a professional legal adviser or client and a third party [2].  

However, as:  

• parties, counsel and arbitrators in international arbitration proceedings frequently hail from different jurisdictions, cultures and legal traditions (both common and civil law), 
• legal counsel from different jurisdictions will likely be subject to different ethical and legal rules on privilege and related concepts,  
• relevant documents don’t always emanate straightforwardly from a single jurisdiction, and 
• who can benefit from and/or waive different categories of privilege, and in what circumstances, differs significantly as between jurisdictions, 

the process of determining and applying the relevant rules of privilege in an international arbitration is often complex absent party agreement on such matters (which is rarely found in practice).  

As a result, the time and energy spent in arbitral proceedings ironing out privilege issues can lead to increased costs and delay, and dealing with such issues may not, ultimately, impact the substantive issues in dispute in a meaningful way. 

The widely-embraced IBA Rules on the Taking of Evidence in International Arbitration (the IBA Rules) contemplate that “legal impediment or privilege” can, under the legal or ethical rules determined by an arbitral tribunal to apply, provide grounds on which to exclude any document, etc, from evidence or production in arbitral proceedings (IBA Rules, Art 9(2)(b)). While the IBA Rules set out a series of matters which a tribunal may take into account when considering issues of legal impediment or privilege (including any need to protect the confidentiality of documents, etc, created in connection with and for the purpose of obtaining or providing legal advice), they do not set out the standards to be applied by the tribunal (IBA Rules, Art 9(4)).  

As the Task Force’s report discusses, where parties have not agreed on the rules of privilege for their arbitration, a tribunal has wide discretion in this regard, which means high levels of uncertainty as to how the applicable privilege rules will be chosen and how they will be applied. 

Some proposed solutions 

Calls for improved and harmonised approaches to privilege in international arbitration are not new.  

In 2019, the Inter-Pacific Bar Association (IPBA) produced a set of guidelines on privilege and attorney secrecy which provided (to the authors’ knowledge) the first uniform framework on privilege for international arbitration [3]. These guidelines have not, however, been widely adopted internationally, perhaps due to their “limited regional reach” and the outbreak of the COVID-19 pandemic [4].  

As the underlying problem has not gone away, it makes sense to explore other possible solutions.  

The Task Force considered whether uniform guidelines on privilege in international arbitration were both desirable and possible.  

The Task Force concluded that uniform guidelines would be desirable for two main reasons: 

1. The way privilege is managed currently in international arbitration lacks clarity and consistency, which impacts the fair and efficient running of proceedings; and 
2. There appears to be an expectation from within the international arbitration community that such guidelines should be produced. 

As for the art of the possible, the Task Force concluded that the development of uniform guidelines on privilege (and any exceptions thereto) was possible, but only with respect to certain categories of privilege, i.e.: 

1. Legal advice privilege, i.e., confidential communications between a client and his/her/their professional legal adviser, made for the purpose of seeking, obtaining or providing legal advice or related legal assistance. This category would include the related concepts of attorney-client privilege and work-product doctrine. 
2. Legal proceedings / litigation privilege, e.g., confidential communications between a client or his/her/their legal adviser and a third party (such as a factual witness or expert), where such communications are made in connection with pending or contemplated legal proceedings.
3. Without prejudice / settlement privilege, i.e., confidential communications between the parties to a dispute where such communications are were aimed at the settlement of that dispute.  

In contrast, the Task Force concluded (at least for now) that it is not possible to develop uniform privilege guidelines for: 

1. Public interest immunity (PII), i.e., the notion that government or other public authorities may withhold certain information from disclosure in court or other legal proceedings if its release would be contrary to public interest. The reason given: developing a uniform guideline on PII would be difficult (if not impossible) because of the wide differences in the scope and application of PII in different jurisdictions and due to public policy concerns. 
2. Common interest privilege, i.e., the idea that parties with a shared legal interest may share information with each other without waiving other types of privilege. The reason given: it is difficult to conclude that there should be a standalone uniform rule applicable to this type of privilege, but it could be recognised as an exception to other forms of privilege. 
3. Privilege against self-incrimination, i.e., the notion that individuals should be permitted to refuse to answer questions or provide evidence that could incriminate them. The reason given: it is not possible to formulate uniform rules in this context considering the disparate views taken across different jurisdictions and the public policy concerns that may bar their application. 

The Task Force also concluded that the IBA Arbitration Committee should consider adopting a uniform choice-of-law guideline to help deal with categories of privilege not covered by any uniform guidelines and/or to provide an alternative to the uniform guidelines should parties want clarity on a choice-of-law mechanism.  

Food for thought 

It is hard to disagree with the principal reasons for pursuing the development of uniform guidelines on categories of privilege (and a choice-of-law guideline): too much time and money is spent attempting to resolve privilege-related issues in international arbitration, and the lack of certainty and clarity for parties risks undermining the attractiveness of this form of dispute resolution.  

Nevertheless, there may be reasons to be cautious about the introduction of uniform guidelines or rules on privilege, for example: 

1. Will they introduce unnecessary complexity or doubt in simple cases? 
2. Will they present a common law-centric view on the issues, putting parties, counsel and arbitrators from civil law jurisdictions at a disadvantage? 
3. Will the capacity of arbitrators to manage privilege issues on a case-by-case basis be undermined? 
4. Will the expectations of parties and legal counsel at the time the privilege arose be overridden? 
5. How will any inalienable or non-waivable privilege obligations on legal counsel under national laws be protected? 
6. Given the IPBA guidelines have not gained traction globally, is there a risk that the IBA’s project may also fail to introduce the change sought?  
7. Is this project another example of the proliferation of soft law which may further judicialise or formalise arbitral proceedings for the worse? 

It is, of course, possible to provide answers to each of the questions above. Indeed, the Task Force report grapples with some of these issues and we can expect an expanded Task Force to consider these and other issues as part of any future work.  

As a perennial bugbear of parties and counsel alike, we look forward to debating and discussing this topic with colleagues during LIDW in June. 

***  

Barry Fletcher is a Senior Knowledge Lawyer with significant experience in international arbitration obtained from private practice and as a knowledge lawyer/legal editor. Barry ensures DLA Piper’s leading International Arbitration group leverages its collective experience and expertise for the benefit of clients, and that colleagues have what they need to deliver exceptional service. Barry is also a member of the LIDW Strategy Group, focusing on the LIDW Core Conference and its keynote speakers. 

James Carter is a Partner at DLA Piper specialising in complex commercial arbitration and litigation. James acts for clients across a broad spectrum of sectors including energy, banking and financial services, telecommunications and technology. James is the UK Co-Head of Arbitration and Litigation, and UK Head of Energy and Natural Resources. In 2024, The Legal 500 has recognised James as “a fantastic lawyer. He is to the point, sharp, pragmatic and innovative.”

Anna Mills is a Partner at DLA Piper specialising in construction and engineering disputes. Anna acts for a wide range of domestic and international clients across a number of different industry sectors including renewables (particularly wind), conventional power, infrastructure, oil and gas, transport and manufacturing. Anna is Co-Head of International Arbitration, Europe. In 2024, The Legal 500 recognised Anna as “fantastic – hugely bright, unbelievably hard-working and completely dedicated to her clients – a superb lawyer and a terrific solicitor, and a delight to work with.”

 References

[1] Report on Uniform Guidelines on Privilege in International Arbitration (ibanet.org)

[2] Colin Passmore on Privilege, 4^th Edition, para 1-001

[3] Publications | IPBA Privilege Guidelines : The Inter-Pacific Bar Association (IPBA)

[4] A Solution To Issues Of Privilege In International Arbitration? The IPBA Guidelines | OBLIN