No one can deny the increasing importance of international arbitration in today’s connected business world. Because arbitration awards are much easier to enforce abroad than domestic court judgments are, and due to the perceived neutrality of international arbitration compared to home-court lawsuits, arbitration has significant advantages over litigation in resolving international commercial disputes. For most sophisticated corporations, arbitration has become the default dispute-resolution mechanism for international transactions. As a result, international arbitration has grown in tandem with the explosive growth of international trade.
Ten questions that an international arbitration practitioner should take pains to avoid in cases concerning contractual interpretation and breach. The recommended abstinence applies mainly to cross-examination where the governing law is common law, but the majority of the questions from which counsel should abstain in common law should in most cases be likewise avoided during cross-examination where the arbitration is governed by civil law. The lesson to bear in mind is that, in his preparation for cross-examination, counsel must have a firm grasp of his case theory, before trying to establish the facts that are the foundation stones of that theory. He must first understand the rules of contractual interpretation and contractual breach (these being the two most common issues in practice), and focus his mind on the significance of questioning witnesses in contract cases and whether certain questions should be asked. Even where questions are permissible, they may not be (a) relevant to the legal issues at hand; or (b) helpful to the tribunal in deciding the key issues.
Third:Questions about a witness’s interpretation of letters or contractual documents unless it impacted on his subsequent actions, eg, “What does this clause of the contract mean to you? What do you think the writer of this letter meant by paragraph X?”
go Fourth:Questions to demonstrate what is or is not in a document, eg, “Where in this document does it say [whatever]? Do you agree that this clause does not say anything about [something]? Look at this document – does it contain any reference to [x]?”
click here Fifth:Questions for dramatic effect which do not add to the knowledge of the tribunal, eg, “I put it to you that you are not telling the truth (unless counsel has built up a foundation for this suggestion by previous questioning). Could you please read out the third paragraph of your letter?”
Sixth:Questions designed to make the witness concede facts in favour of the opposing party which are apparent from the record and are not denied, eg, “Do you agree that you never replied to my client’s letter?”
Seventh:Questions solely aimed at attacking credibility or creating prejudice, ie, having no direct relevance to the issues, but designed to question the witness’s credibility or character by asking him questions on other matters outside the events covered by the existing arbitration.
Ninth:Questions which take a witness through facts and documents with a view to making the witness agree with the other party’s interpretation of a document or characterisation of events (rather than the actual facts themselves), eg, “Do you agree that my client behaved reasonably under the circumstances?”
The principles of contractual interpretation render such questions pointless (Questions 1, 2 and 3)
- The approach to contractual interpretation is objective (Question 1)
In the common law context, the aim of interpretation is not to probe the real intentions of the parties but to ascertain the contextual meaning of the relevant contractual language. The question to be asked is what a reasonable person, given the factual matrix in which the contract was made, would have understood the parties to have meant by the use of specific language. The answer to this question is to be gathered from the text under consideration and its relevant contextual scene.8 However, where the contract is complete on its face, the language of the contract constitutes prima facie proof of the parties’ intentions9 and it is only in limited circumstances that the courts can seek to interpret the document using information from beyond the four corners of the contract.
Consequently, the subjective intentions of the parties have no role to play in contractual interpretation. This is why questions aimed at demonstrating the parties’ subjective intentions at the time of the contract (ie, Question 1-type questions) are unhelpful and irrelevant to the legal issue at hand. It makes no difference to the outcome of the case, even if it can be established what the witness meant when he penned a letter or typed a document. It makes no difference why the witness inserted a particular clause into the agreement, or phrased the clause the way he did at the time of the agreement, since both these questions go to the question of what was in the parties’ own minds and their uncommunicated intentions.
There is one exception where the subjective intention of the parties of the parties can override the clear meaning of the written words: when one party applies for rectification11 of the contract so that the written words will reflect the actual intention of the parties. However, unless such an application is made, the remarks made above will apply.
- The court only looks at a limited factual matrix (Question 2)
Questions on motives should be avoided. The significant point to note is that under the common law position, background evidence that is admissible is limited to facts, circumstances in reality and factual matrices. The emphasis is upon what happened and what a party did or did not do; there is no question of why a party did what he did. A party’s motivations for doing what he did or did not do do not impact upon the interpretation of the contract (or whether he has been in breach) and should be disallowed as irrelevant20 (although questions of admissibility are not decided in arbitration on the basis of rules of evidence, but on the tribunal’s perception of what is relevant or helpful to its decision). Cross-examination questions that concern the surrounding facts, circumstances and factual matrices go to the background and context of the transaction and are therefore relevant. In contrast, questions which seek to cast light on a party’s private intentions and motivations are not.
Consequently, these exceptions apart, counsel in a common law international arbitration would be ill-advised to subject the tribunal to questions about why X did or did not do something, or questions which explore each individual party’s motivations for how they negotiated, or even internal e-mails within each individual party (where the party is a company) which discussed the clauses of the contract, such questions being inadmissible where the applicable law of the contract is common law.
- Questions of construction are a matter for the tribunal or dictionaries. Further, pre-contractual negotiations and post-contract conduct may generally not be taken into account for contractual interpretation (Question 3)
Aside from avoiding questions on unarticulated intention and motives, counsel should also abstain from asking questions about the witness’s interpretation of letters or contractual documents (unless the interpretation impacted on that witness’s subsequent actions). This is for two reasons.
(a) Questions of construction, whether of domestic or foreign documents, are matters of law and not of fact and belong exclusively to the court and the opinions of experts thereon are irrelevant.
In short, the interpretation of contractual or commercial documents is a matter for the tribunal to decide, and it makes no sense for counsel to cross-examine a witness on his interpretation of a particular document unless his understanding of the document (right or wrong) is helpful in explaining why he took a particular course of action (provided the reasons for his action are themselves relevant in deciding the critical issues in the case).
(b) Where the tribunal is unable to interpret certain terms in a written instrument, its first course of action would be to construe the terms by reference to dictionaries and other material23 and a witness’s interpretation will seldom be relevant. Accordingly, Question 3-type questions should be avoided.
Questions about a witness’s interpretation of letters or contractual documents can relate to the witness’s knowledge of contractually related matters before as well as after the making of the contract. Another reason for discouraging “why” questions about a witness’s interpretation of letters or contractual documents is that the common law generally excludes from evidence, the pre-contractual negotiations and post-contract conduct of parties.
Hence, the answers to questions asking what the witness interpreted certain pre-contractual letters which deal with the price of goods to be sold or questions seeking to show that the witness behaved in a manner inconsistent with the words of a contract after the dates of the contract (to show that the contract does not mean what it says) may (depending on the governing law) be irrelevant (unless some argument based on estoppel is being mounted) and it would make little sense to waste the tribunal’s time on such questions. Consequently, unless a careful scrutiny of the laws of contractual interpretation has been conducted, Counsel may wish to reconsider questions seeking to uncover a witness’s interpretation of pre- or post-contractual documents or even post-contractual behaviour as a tool of contractual interpretation.
As a matter of practice, “forensic” questions (Questions 4, 5, 6 and 7) are not helpful and merely waste time unnecessarily
“Forensic” questions are questions which do not enlighten the tribunal but are solely designed to introduce what are largely uncontroversial matters and are therefore asked either as “throat-clearing” exercises for the cross-examiner or because counsel wants to use the witness to demonstrate his own folly or lack of credibility to prejudice the tribunal or simply for dramatic effect.
Even if parties have a large number of witnesses, the tribunal is more likely than not to adopt some form of case management system to bring both time and costs under control. The tribunal may therefore exhort parties to get together to agree the maximum time each witness will have, subject to the final discretion of the tribunal to extend time. The tribunal may even adopt the “chess clock” method and confine parties to a total amount of time and then making all parties stick to it no matter what excuses may be made.
Under such circumstances, counsel in such fixed-time arbitrations will need to be frugal with use of time and will have to be very selective about the line of cross-examination he wants to adopt. In short, he needs to get to the point very quickly and there is no room in arbitration for forensic questions.
International arbitration does not allow a time budget for questions which are purely designed to rattle a witness without advancing the knowledge of the tribunal about the matters in issue. With regard to questions which demonstrate what is or not in a document, counsel should note that most tribunals respond better to a reasoned and structured argument from counsel on undisputed facts rather than hearing them emerge in piecemeal fashion on cross examination.
- Legal issues are matters for submission (Question 8)
Nothing pains a tribunal more than to hear a counsel trying to debate a point of law with a lay witness, e.g., “Is it not clear that clause X means …?” Any tribunal should (and usually will) stop counsel with the pained admonition: “Is that not a matter for counsel’s submission?”
- Questions which take a witness through facts and documents with a view to making the witness agree with the other party’s interpretation of a document or characterization of events (rather than the actual facts themselves) are generally not worth the time (Question 9)
The questions are a variant of Questions 4 to 7. They are forensic to a degree but involve a high degree of argument with the witness as counsel seeks to take an undisputed fact or document and put a spin on it which he endeavors to persuade the witness to accept. As the saying goes, “nice work if you can do it”, but realistically, in the limited time available for cross-examination in international arbitration, such an exercise is likely to end in frustration as the tribunal is not going to be generous in allowing counsel extra time to persuade a witness to agree with counsel’s version of interpreting or characterizing facts or documents.
- “Yes’’ or “no’’ questions may be unfair (Question 10)
A favourite technique of some cross-examining counsel is to tell a witness to “please answer ‘yes’ or ‘no’”. While this technique is justifiable to some extent in ensuring clarity in the position taken by witnesses, there are times when such an approach is unfair and when the question is not really capable of a “yes” or “no” answer (the classic example taught in law school being “and when did you stop beating your wife?”).
This warning can further be extended to include questions based on a false or unproven premise. An alert opposing party (or tribunal) will usually spot the impropriety of such questions and make an objection. Some of such questions, however, inevitably fall through the cracks and can lead a witness to be confused and give an answer which will give cross-examining counsel temporary satisfaction but which will eventually have to be explained or modified when the misunderstanding of the witness is revealed.
The importance of cross-examination in international arbitration is often overrated. It is not a prerequisite of natural justice28 and can be eschewed completely or substantially if the case is primarily about interpretation of documents, or if there are no substantial disputes of fact. Common lawyers are familiar with the litigation procedure known as originating summons, where the court rules on a case without hearing oral evidence, simply on the basis of affidavit evidence alone, so it is possible to conduct an arbitration on the basis of documentary evidence alone, with no or minimal oral evidence in support.
Arbitrators have more often than not been disappointed by how little they have learnt from hearing the witnesses, as opposed to reading their witness statements and reviewing the relevant documents. Indeed, what arbitrators find lacking in international arbitration is the time spent on oral advocacy, where counsel explain their written submissions before the tribunal, which can then exercise a Socratic dialogue with counsel in clarifying and testing those submissions. If more time is spent on oral submissions, that would add more value to the tribunal’s appreciation of the facts and issues and arguments than long hours with the witnesses. However, if we are to have oral witness evidence in an international arbitration, then counsel should bear the following precepts in mind: He should ascertain what the rules of contractual interpretation and liability are under the applicable law, and plan his cross-examination based on what is necessary to establish or deny contractual liability (as the case may be) under that law. Further, considering the time constraints in international arbitration, counsel should limit cross-examination to areas which are most necessary. As a rule of thumb, he should test his proposed questions by asking himself: “What use can I make of the answers to these questions in my Post Hearing Brief?” If he cannot answer his own question, then he should probably omit that question. The mantra for cross-examination should be “less is more”.