4 August, 2012

Legal News & Analysis – Asia Pacific – Singapore – Dispute Resolution

One important issue often overlooked by some parties to arbitrations that concern highly technical or scientific disputes is the possibility of conducting experiments or inspections to test the parties’ cases. For example, experiments may be conducted by experts to test if a particular product has met the technical specifications set out in a contract. This may be helpful to the arbitral tribunal in its determination of the issues, and at times, may even swing the case in one party’s favour.

For arbitrations seated in Singapore, the tribunal is expressly empowered to make orders or give directions to any party for “samples to be taken from, or any observation to be made of or experiment conducted upon, any property which is or forms part of the subject-matter of the dispute”. (Section 12(1)(e) of the International Arbitration Act (Cap 143A, 2002 Rev Ed). See also rule 24(e) of the Singapore International Arbitration Centre Rules 2010; article 25(1) of the International Chamber of Commerce Rules 2012 which allows the tribunal to use “all appropriate means" to establish the facts of the case, and article 7 of the 2010 International Bar Association Rules on the Taking of Evidence in International Arbitration. A useful guideline for experts who wish to conduct experiments is set out in article 6 of the Chartered Institute of Arbitrators’ Protocol for the Use of Party-Appointed Expert Witnesses in International Arbitration), 

A party considering whether to conduct experiments, or to agree to the conduct of experiments, should first ask itself: what should be tested? While the answer to this question would of course largely depend on the particular factual matrix of the arbitration, one key consideration is that the test must be relevant and credible.

A recent arbitration that the writers were involved in concerned a dispute over whether a technically complex product, and the various components of that product, could perform according to the contractual requirements set by the purchaser. The supplier decided, a few months into the arbitration, that it wanted a test of the components it had supplied to show that those components fully complied with the contractual requirements. Unfortunately, many key components, including the original computer server that controlled the product, could no longer be retrieved. Only a handful of samples of the other components were made available to the experts in that arbitration for testing. Despite that, the supplier decided that it would provide a “mock-up”, or replica, of the computer server and test whatever components were available with that mock-up.

This naturally gave rise to a number of difficulties: eg how would anyone be able to tell if the mock-up accurately replicated the original computer, given that the original computer, and the software loaded on to that computer, could not be inspected? In any event, what was the probative value in having tests conducted on a handful of samples if the majority of the components could not be tested? In the result, even the supplier’s expert who was called to give an opinion on the performance of the product agreed that the test results were, at best, inconclusive.

To avoid these difficulties, a party considering experiments should bear in mind the availability, and provenance, of samples for testing. This also means that once a party learns of the possibility of arbitration, it should think about how best to store, preserve and document information about the samples.

Further, any test should be designed with the outcome in mind. A party should not propose a test without first thinking about how to deal with the possible test results, or criticisms of the testing procedure. It may well be that there would not be any benefit in calling for a test if, at the end of the day, the limitations of the testing procedure prevent an expert from giving a meaningful conclusion to the tribunal.

Such consequences can easily be avoided. A party may find out for itself how an experiment will play out by conducting those experiments on its own, whether through an in-house technical team or otherwise, before making a decision whether to call for the experts to conduct tests.

The take-away is really the need to plan ahead. Rather than waiting for the issue to arise at the request of the opposing party or the tribunal, a party involved in a technical or scientific dispute should, as early as possible, start thinking about the possibility of conducting experiments or inspections. This is important not only for the preservation of evidence, but also for the selection of experts and the logistics of the testing process.