The Admissibility of Unlawfully Obtained Evidence in International Arbitration: Does the End Justify the Means? PDF

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The Admissibility of Unlawfully Obtained Evidence in International Arbitration: Does the End Justify the Means? Grégoire Bertrou Partner at Willkie Farr & Gallagher (Paris, France) Sergey Alekhin Associate at Willkie Farr & Gallagher (Paris, France) 1 “You cannot have the right to do what is...

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The Admissibility of Unlawfully Obtained Evidence in International Arbitration: Does the End Justify the Means? Sergey Alekhin Cahiers de l'Arbitrage / The Paris Journal of International Arbitration

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The Admissibility of Unlawfully Obtained Evidence in International Arbitration: Does the End Justify the Means? Grégoire BERTROU Partner at Willkie Farr & Gallagher (Paris, France) Sergey ALEKHIN Associate at Willkie Farr & Gallagher (Paris, France) 1

“You cannot have the right to do what is wrong” Abraham LINCOLN “You can’t put the genie back in the bottle” Street WISDOM

RÉSUMÉ

Les tribunaux arbitraux sont de plus en plus fréquemment confrontés à la question de l’administration de la preuve illicite, notamment en raison de la multiplication des fuites massives de documents dans le domaine public (« leaktivism ») et à l’augmentation des cas de piratage informatique. Si la définition de la preuve illicite et sa recevabilité devant les tribunaux étatiques donnent lieu à une jurisprudence abondante, la jurisprudence arbitrale accessible est plus limitée et la question n’a pas donné lieu à une étude détaillée depuis plus de cinq ans. Le sujet n’a pas non plus fait l’objet de lignes directrices, les praticiens considérant en général que c’est une question qui relève de la discrétion du tribunal arbitral et qui doit être tranchée au cas par cas en fonction des circonstances. L’objet de la présente étude est donc, dans un premier temps, de dresser un panorama des précédents en matière d’administration de la preuve illicite, en partant d’une analyse de droit comparé en droit français, anglais et de l’État de New York, pour se focaliser ensuite sur les précédents en arbitrage international et, dans un second temps, de dresser un bilan des solutions généralement retenues et formuler certaines recommandations qui pourraient servir de base à une réflexion de place. 1. The views expressed herein are the authors’ own and do not necessarily reflect the views of the firm they represent or any of its clients. The authors thank Charlotte Woodley for her input and suggested technical edits.

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ABSTRACT

Arbitral tribunals are increasingly confronted with the issue of the admissibility of unlawfully obtained evidence, in particular due to the multiplication of massive document leaks into the public domain (“leaktivism”) and instances of hacking. Whereas the definition of unlawfully obtained evidence and its admissibility are subjects of abundant case law in domestic jurisdictions, the publiclyavailable arbitral jurisprudence on this topic is more limited, and this issue has not featured in academic studies for more than five years. Nor are there guidelines on how to address this issue, as practitioners generally deem that it should be left to the discretion of the arbitral tribunal, which should approach the problem on a case-by-case basis. The purpose of this study is twofold. First, we present a panorama of case law dealing with the admissibility of unlawfully obtained evidence, starting from a comparative law analysis between French, English and New York jurisdictions, and then proceeding with an overview of arbitral and public international case law. Second, we take stock of the solutions adopted and formulate certain recommendations that may serve as basis for further reflection on a universal approach to the admissibility of unlawfully obtained evidence.

Introduction “Leak to us,” invites the website of the International Consortium of Investigative Journalists (ICIJ), that in late 2016 gave the world the Panama Papers, a collection of 11.5 million confidential and privileged documents on over 214,000 offshore entities obtained from the archives of Mossack Fonseca, a Panama law firm. 2 ICIJ, the global network of over 200 investigative journalists that “encourages whistleblowers to securely submit content that might be of public concern” was also behind the Offshore Leaks (2013, confidential data on more than 785,000 offshore companies), the Luxemburg Leaks (2014, confidential tax information on over 300  multinational companies), the Swiss Leaks (2015, confidential banking information on over 100,000 entities), and most recently the Paradise Papers (2017, 13.4 million confidential documents on offshore structures involving over 120,000 people and companies). 3 WikiLeaks, the famed organization that revealed over 250,000 U.S. diplomatic cables in the course of 2010-2011, also hosts over 5.5 million leaked internal emails and files of Stratfor, the global intelligence company, over 200,000 leaked documents of Sony Pictures Entertainment, over 25,000 leaked documents of the U.S. Democratic National Committee, and over 21,000 leaked emails associated 2. International Consortium of Investigative Journalists, Leak to Us (2019), available at https:// www.icij.org/leak/. 3. The more recent (May 2018) ‘West Africa Leaks’ (see https://www.icij.org/investigations/westafrica-leaks/) is, in fact, ICIJ’s analysis of the documents from Offshore Leaks, Swiss Leaks, Panama Papers and Paradise Papers.

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with the French presidential campaign of Emmanuel Macron. 4 Among WikiLeaks’ most recent releases is the full text of a confidential ICC award rendered back in 2010 in a contractual dispute involving the supply of combat tanks by a stateowned French arms manufacturer to the United Arab Emirates. 5 A veritable alternative to WikiLeaks, the Distributed Denial of Secrets website, recently started publishing voluminous hacked and leaked datasets from Russian, U.S., Chinese, Australian, Italian, German, Brazilian, Argentinian, Azerbaijani, Turkish, Syrian, Cambodian, and South African government institutions and private companies. 6 In turn, Edward Snowden, the former CIA employee and contractor of the U.S. Government, reportedly copied over 1.7 million internal and classified documents, including on global surveillance programs, sharing them with major media outlets around the world. 7 Dubbed “leaktivism,” leaking truthful, yet confidential information is argued by its proponents to be an effective form of protest that may bring positive social change. 8 A related concept, “hacktivism” is essentially the (mis-)use of computer technology to achieve a political agenda through legally dubious means. 9 It is also arguably one step short of “cyberterrorism.” As with ordinary hacking, at the receiving end of leaktivism and hacktivism are not only State organs, politicians and multinational companies, but also small businesses, individuals, law firms and consultants – essentially anyone in possession of somewhat valuable information. Controversial and unsettled as these concepts are, their effects have already reached out far beyond social activism and investigative journalism. To litigants, getting their hands on a WikiLeaks-sourced “smoking gun” means bypassing ordinary pre-trial discovery (assuming that crucial document would have been part of discoverable evidence) and potentially dramatically increasing their chances of winning. This is even more pertinent in international arbitration, where victory is often achieved by storytelling and convincingly presenting the facts, as opposed to the strict application of principles of law. 10 The need to persuade arbitrators often from different legal traditions and cultures adds yet another layer of complication. Taking proactive steps to unlawfully obtain (directly or indirectly) evidence for subsequent use in litigation or arbitration is a more traditional concern. Yet, gone are the days when wiretapping and surveillance –  the conventional methods of

4. See WikiLeaks, What is WikiLeaks (October 3, 2015), available at https://wikileaks.org/Whatis-Wikileaks.html. 5. See WikiLeaks, Dealmaker: Al Yousef (September 28, 2018), available at https://wikileaks.org/ dealmaker/Al-Yousef/. 6. Scott SHANE, “Huge Trove of Leaked Russian Documents Is Published by Transparency Advocates”, The New York Times, January 25, 2019; Distributed Denial of Secrets, Welcome to DDOS (2019), available at http://ddosecretspzwfy7.onion/ (via TorBrowser). 7. Jason LEOPOLD, Exclusive: Inside Washington’s Quest to Bring Down Edward Snowden (June 4, 2015), available at https://news.vice.com/en_us/article/qv54gd/exclusive-inside-washingtonsquest-to-bring-down-edward-snowden. 8. Micah WHITE, “The Panama Papers: Leaktivism's Coming of Age”, The Guardian, April 5, 2016. 9. Dorothy E. DENNING, “Activism, Hacktivism, and Cyberterrorism: The Internet as a Tool for Influencing Foreign Policy”, in Networks and Netwars: the Future of Terror, Crime, and Militancy (John ARQUILLA, et al. eds., 2001). 10. See Nigel BLACKABY & Constantine PARTASIDES, Redfern and Hunter on International Arbitration (Kluwer Law International 6th ed., 2015), pp.  375-376 (suggesting that outcomes of 60-70% of arbitration cases “usually turn on the facts rather than on the application of the relevant principles of law”).

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unlawful evidence gathering – were accessible only to government authorities and powerful corporate players. A recent cybersecurity report points out that access to internal files of virtually any company may be ‘bought’ on underground hacker marketplaces for an average price of USD 1,500. 11 Another recent study confirmed that law firms are especially prone to cyberattacks as they hold “incredibly sensitive and private information, and many don’t invest the capital to properly secure their data.” 12 In fact, in 2017, 22% of law firms surveyed were subject to cyberattacks, a dramatic yearly increase of 14%. 13 Cybersecurity is everyone’s problem now. The questions that then inevitably appear before an arbitral tribunal are, nonexhaustively: what evidence is admissible in an international arbitration setting? Should tribunals adopt exclusionary rules and refuse to admit unlawfully obtained evidence? What constitutes unlawfully obtained evidence? Does public disclosure, through a leak or otherwise, of a confidential document make it admissible as evidence? Does the interest in truth-finding prevail over confidentiality and privilege, in particular legal privilege (and what are the limits of legal privilege)? What if the party tendering the evidence was involved in the underlying unauthorized public disclosure? Would the admission of unlawfully obtained evidence condone and incentivize other parties to employ all means available to lay their hands on a ‘smoking gun’? National courts have developed their own approaches to the definitions of unlawful evidence and its admissibility. As outlined in Section II, although national law principles governing admissibility of evidence are hardly applicable to international arbitration, arbitral tribunals sometimes refer to domestic jurisprudence and the admissibility principles crystallized therein. Accordingly, Annex I to this paper includes a comparative analysis of legal principles and court practices that have crystallized in France, the United States and the United Kingdom. In summary, although the solutions adopted vary significantly between civil, criminal and administrative proceedings, and are hardly coherent from one jurisdiction to another, 14 the following principles emerge: •  A distinction is usually drawn between civil and criminal matters (and to some extent administrative matters): the admissibility of evidence is more limited in civil proceedings because the interests at stake do not involve public policy or criminal sanctions; • In civil and commercial proceedings – of greater relevance to this study – the following principles are generally taken into consideration: i.  What constitutes ‘‘unlawfully’’ or ‘‘unfairly’’ obtained evidence varies significantly from one jurisdiction to the other; the same goes for the protection of privacy; ii. Legal privilege is generally strongly protected, other forms of secrecy (e.g. medical, religious, notarial, and judicial) are considered on a case-by-case basis;

11. Secureworks, 2018 State of Cybercrime: The Deep Dark Truth Behind the Underground Hacker Economy, p. 17. 12. Logicforce, Q4 2018 Cybersecurity Scorecard (2018), available at https://www.logicforce. com/2018/11/02/cyber-security-scorecard-q4-2018/, p. 5. 13. Ibid.. 14. See, e.g., Stephen J. KACZYNSKI, “The Admissibility of Illegally Obtained Evidence: American and Foreign Approaches Compared”, 101 Military Law Review 83 (1983); Bram PRESSER, “Public Policy, Police Interest: A Re-evaluation of the Judicial Discretion to Exclude Improperly or Illegally Obtained Evidence”, 25 Melbourne University Law Review 757 (2001).

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iii.  Judges often apply a proportionality test taking into consideration the interests at stake (i.e. the right to evidence vs. the relevant interest to be protected); and iv.  Case law involving leaked documents remains scarce and unsettled within each jurisdiction analyzed. Having said that, what of the admissibility of evidence before international tribunals? In a 1996 study, one author highlighted the “near absence of precedents on the inadmissibility of evidence obtained through illicit acts,” noting that there is “no established rule as to the admissibility of illegally obtained evidence in international procedure.” 15 The former proposition is no longer true – as of today, in no less than twenty-nine publicly-reported instances, international tribunals have been confronted with unlawfully obtained evidence. However, the latter statement remains relevant to date –  no unified approach to the admissibility of unlawfully obtained evidence has been adopted. More recently, other authors concurred with this idea, suggesting that there is no clear view “as to whether illegally obtained evidence should be accepted by a tribunal,” and that this is a “discretionary matter for a tribunal” that will “depend on circumstances.” 16 Although this conclusion appears to be the most conservative and realistic, we believe there is still room to set out certain key guidelines. This article provides a comprehensive overview of the case law of public international law courts, investment tribunals, sports arbitration tribunals and several other fora dealing with unlawfully obtained evidence (Section I) and sets out a concrete proposal as regards the admissibility of such evidence in international arbitration proceedings (Section II). The proposed approach is rather permissive, but less so than the “everything counts” suggestion made by some parties, including even investment arbitration tribunals. 17 We consider that the starting point must be the presumption of admissibility (or inclusionary rule) even of unlawfully obtained evidence, constrained by two exceptions: non-observance of the general duty of good faith / which certain tribunals have characterized as evidence submitted with ‘unclean hands’ (further defined and discussed below) and legal privilege (the scope of which is also further discussed below). These exceptions have their –  uneasilydefined – limits, beyond which there would be a renvoi to the inclusionary rule. We then conclude with a summary of our analysis and proposals, and a general outlook that we hope will lead to further academic and practical discussion on the admissibility of unlawfully obtained evidence in international arbitration (Section III). Prior to setting out the various approaches of international tribunals to the admissibility of unlawfully obtained evidence, we think it useful to suggest the following typology of evidence, the admissibility of which may be disputed by the parties: i.  evidence obtained by a party in a clandestine manner, without the consent of the other party or parties, including by way of audio- or videorecording, wiretapping and interception of communications;

15. Mojtaba KAZAZI, Burden of Proof and Related Issues: a Study on Evidence Before International Tribunals (Kluwer Law International, 1996), pp. 207-208. 16. Jeffrey WAINCYMER, Procedure and Evidence in International Arbitration (Kluwer Law International, 2015), p. 797. 17. Burlington Resources Inc. v. Republic of Ecuador (ICSID Case No. ARB/08/5), Decision on Liability, December 14, 2012 (“Burlington Decision on Liability”), ¶221.

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ii.  evidence obtained by a party through intrusion (physical or electronic) onto the premises or into the information systems of the other party, i.e. hacking; iii. evidence falling within categories [i] and [ii] above, obtained by a nonparty to the dispute upon instructions, or following incitement by the party wishing to benefit from such evidence; iv.  evidence falling within categories [i] and [ii] above, obtained by a non-party to the dispute unrelated to the party wishing to benefit from such evidence, and not upon instructions or following incitement by that party, which is then disseminated to the public (i.e. leaked); v. evidence legitimately obtained by a State party in the course of domestic prosecutorial or investigative actions, that the same State party then seeks to rely on in international litigation; and vi. evidence falling within category [v] above, save that it was obtained by a State party in breach of its domestic evidence rules. As our analysis will show, the answer on whether a disputed item of evidence should be admitted or not largely depends on what category this evidence falls into.

I. – Various approaches of international tribunals to the admissibility of unlawfully obtained evidencE As indicated in the introduction, the admissibility of unlawfully obtained evidence is a recurrent issue before international tribunals. In this Section, we provide an extensive analysis of the relevant case law of (A) the International Court of Justice, (B) various investment arbitration tribunals, (C) the Court of Arbitration for Sport and (D) a number of other fora. We do not discuss in this section international criminal case law both because, as outlined in introduction, criminal proceedings involve public policy interests which command specific admissibility rules, and also because the procedural and evidentiary rules of most international criminal tribunals include an exclusionary rule expressly prohibiting the submission of certain categories of evidence. Nevertheless, we suggest that this body of case law –  quite considerable in size 18 – should not be ignored, as it often provides a valuable insight into the legal reasoning behind admitting or excluding unlawfully obtained evidence, as well as 18. The International Tribunal for the Former Yugoslavia (ICTY) has been confronted with the admissibility of WikiLeaks-sourced documents on at least three occasions: (i) Prosecutor v. Ante Gotovina and Mladen Markac (IT-06-90-A), Decision on Ante Gotovina’s and Mladen Markac’s Motions for...