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Obtaining evidence from reluctant non-party witnesses in arbitration


United Kingdom, United States

Fieldfisher arbitration specialists Hoda Fahiya and Daniel Hayward consider the Court of Appeal's decision in A and B v C, D and E [2020] EWCA Civ 409.

In an interesting reversal of the English High Court's first instance decision of 12 February 2020, the Court of Appeal (CoA) confirmed that the courts of England and Wales can compel the taking of evidence from a non-party witness refusing to provide evidence in a non-English seated arbitration, by virtue of s44(2)(a) of the Arbitration Act 1996. 
This development potentially provides a new strategic opportunity to parties in arbitration, who may now find it far easier to make reluctant non-party witnesses give evidence in their proceedings (at least when they reside in England and Wales).
In this case, the appellants (A and B) and the second respondents (C and D) had been parties to a settlement agreement in relation to the development of an oil field off the coast of Central Asia.
Payments were made to the Central Asian government by the second and third respondents. A dispute arose between the parties as to whether those payments constituted legitimate "signature bonuses", or unlawful bribes.
As the third respondent (E) had been key to negotiating the payments, the appellants applied to compel the court to have E's evidence taken in England, where E resided, due to E's refusal to testify in New York, where the arbitration was seated.
The appellant's argument to request E's testimony was furthered by G, another person involved in negotiating the payments, who had previously been indicted by a US court for violations of the US Foreign Corrupt Practices Act.
The tribunal granted the appellants' permission to seek E's evidence by deposition from the English Court under s.44(2)(a) Arbitration Act 1996 and the Civil Procedure Rules, r.34.8.
Why did the Court of Appeal's approach differ from the Commercial Court's decision?
The first instance decision made by the English High Court was reversed and, in making the judgment, the Court of Appeal considered the decisions of Cruz City Mauritius Holdings v Unitech Limited [2014] EWHC 3704 (Comm) and Dtek Trading SA v Morozov [2017] EWHC 94.
These authorities concerned other subsections of s.44 not under discussion in the present case; s.44(2)(b) and s44(2)(e).
In both cases, it was found that s.44 did not include the power to make an order against a non-party to an arbitration agreement.
In the present judgment, the Court of Appeal was satisfied that s.44(2)(a) did in fact confer the court with power to compel the giving of evidence for the following reasons:

  1. That s.44(1) must be read alongside two key sections, s.2(3) and s82(2) Arbitration Act 1996, as a result the English Courts have the same powers in both civil proceedings and foreign seated arbitrations;
  2. The Court looked at the meaning of "witnesses" and the wording used in s.44(2)(a) was delineated in a way that included all witnesses and not just non-parties to an arbitration.

The Court of Appeal also considered the overarching question that had been discussed in the previous cases of Cruz and Dtek, which was the court's powers to take evidence. 
The Civil Procedure Rules (CPR), in particular 34.8, allow the court to compel a non-party to give evidence in cases of a deposition and should therefore have the power to do so in a foreign seated arbitration.
The respondents submissions of: (1) the relevance of the other subsections in s.44, (2) the court's power to order a deposition as used in civil litigation was a rarity; and (3) the narrow interpretation of s.44(2)(a) were all rejected and in particular the question of whether the decisions of Cruz and Dtek were judged correctly would only be answered by the court if those issues ''arose directly on appeal''.
Although, the Court of Appeal's decision does not overturn those of Cruz and Dtek and limits discussion of s.44(2)(a), the decision will better inform party strategies and could lead further discussions of the other s.44 subsections and possible reliefs.
It also provides welcome transparency for parties and demonstrates that courts can take evidence from a non-party refusing to provide evidence.
Whether that is to be applied by the court in relation to the subsections considered by the court in Cruz and Dtek remains to be seen. Despite the narrow interpretation of s.44(2)(a) in this case, the unanswered question of the other s44 subsections could ironically lead to the courts broadening their application of the other subsections in future cases involving non-parties in foreign seated arbitrations.
It is key to note the arbitration was seated in New York, and subsequently decisions in cases concerning 28 U.S. Code § 1782. titled “Assistance to foreign and international tribunals and to litigants before such tribunals” ("Section 1782") have opened the door for further remedies for arbitrations seated outside the US.
Currently, this process can be used outside the US in support of both international arbitrations and foreign award enforcement proceedings for obtaining evidence and discovery.
In A v E, the parties were US litigants and Section 1782 provides this tool for non-US litigants.
Therefore, the appellants had to seek permission from the tribunal to request E's evidence. Whilst Section 1782 may constitute an alternative method for parties for obtaining evidence and discovery, parties should remain mindful of developments that the district and circuit courts in the US make.

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