In a decision of 28 February 2017, the Paris Appeal Court held that the IBA Rules on the Taking of Evidence in International Arbitration 2010 (the IBA Rules of Evidence) were applicable as long as the rules were agreed upon by the parties in the Procedural Order n°1. Further, the court ruled that the tribunal was entitled to apply the adverse inference doctrine provided at Article 9(5) of the IBA Rules of Evidence.
The case at hand was about a post-acquisition ICC arbitration dispute concerning the sale of shares of the Spanish company Grupo Guascor to Dresser-Rand Group (the buyer) by twelve Spanish entities (the sellers). An arbitral award was rendered in February 2015 which went partially against the buyer. The latter sought to have the award partially set aside on the ground that the arbitrators violated their mission in applying the IBA Rules of Evidence (and the adverse inference doctrine) because these rules were not referred to in the terms of reference or in the ICC rules. Furthermore, the Dresser-Rand Group contended that the arbitrators violated the buyer’s right to be heard when they decided to draw adverse inference from the buyer’s failure to produce documents without having ordered the production of documents or asked Dresser to explain why they did not produce such documents.
Article 9(5) of the IBA Rules of Evidence provides in relevant part that if a party fails without satisfactory explanation to produce any document requested in a request to produce the arbitral tribunal may infer that such document would be adverse to the interests of that party.
Decision of the Paris Appeal Court
First of all, the Paris Appeal Court ruled that as long as the reference to the IBA Rules of Evidence was made in the Procedural Order n°1, the parties had accepted their application, including the doctrine of adverse inference. Second, the court considered that pursuant to Article 9(5) of the IBA Rules of Evidence the arbitral tribunal could rightfully draw adverse inference from Dresser’s failure to produce documents, without having to order the production of such documents.
This decision shows that arbitration practitioners should be mindful of the possible consequences of a refusal to produce a document: an arbitral tribunal may draw adverse inference from a party’s refusal to produce a document in response to the other side’s request to produce even if the tribunal itself has not ordered the production of the documents. More generally, this decision constitutes an express approval by a leading arbitration jurisdiction of the application of the IBA Rules of Evidence and of the adverse inference doctrine.