It is trite law that the party who makes a claim must prove its case. The claimant who bears the burden of proof is generally required to adduce evidence to establish and validate its assertion in order to recover amount claimed. In most construction contracts, contractor generally gets paid retrospectively on monthly basis in accordance with progress of works done. If and when there are disputes over certain works on site, payments for the concerned works are withheld. In construction arbitrations where the contractor claims outstanding amount for works it considers completed, as claimant it is expected to provide evidence demonstrating that the works it had completed is in compliance with the requirements under the contract. Unfortunately the contractor does not usually have access to the disputed works when it is required to produce certain evidence to prove its claim, especially in mid stream of arbitration proceedings. Where the works in dispute involved complex technical issues, the contractor may be required apply leave from the tribunal to allow its expert witness to have access to relevant parts of the site to carry out inspection. Such inspection can be challenging particularly if the respondent that have ownership and control over the site may resist such request for various strategic reasons. If the claimant makes an application to the tribunal for an order for site inspection, what are the points of considerations as regards rules on the taking of evidence as well as procedural safeguards during the inspection? This article examines some of the tips and traps associated with evidence gathering site inspection in construction arbitration.
One of the key considerations for the tribunal in whether to grant leave in favour of the claimant’s application is the relevance of evidence that could be obtained in consequence of the site inspection. Such evidence should be so material to the issues in dispute that it either proves or disproves a key element of claim. By way of illustration of a hypothetical ocean front amusement park project, if the contractor’s payments are withheld due to an alleged lack of proper protective coating on marine piles, any extraction of samples from the surface of the piles in issue should be dispositive of the core dispute. By way of further example, if a proprietary mechanical hoisting system in the amusement park is alleged to be defective and non functioning, a site inspection by the experts from both parties should assist in identifying existence of any defects and if so the extent of defective works as well as whether the system in issue is fit for its intended purpose as prescribed.
Whilst the objective for such evidence gathering site inspection should not be controversial, there are various risks of procedural pitfalls if it is not carried out with a comprehensive protocol. Although most arbitral proceedings are governed by an agreed set of rules of evidence e.g. International Bar Association (IBA) Rules On The Taking Of Evidence, there are various nuances and constraints that are highly specific to the matters in dispute which may be relevant to the contesting parties and the tribunal. Notwithstanding that, most rules of evidence merely recognise the procedural necessity of site inspection as an avenue for evidence gathering without necessarily providing the specifics of the related protocol. In reality there may be various challenges in carrying out such inspection. This include amongst others whether either party have sufficient ownership and operational control over the concerned site, the timing within which site inspection request was raised balancing with the interest for procedural efficiency, chain of custody of evidence, neutrality of laboratory testing agency, how protocol may be influenced by Mother Nature e.g tide and weather related access constraints etc. These challenges could be compounded if one party raises objection that such site inspection is beyond the scope of arbitration or that there are allegations that one party is intentionally delaying site inspection in a purported disregard of procedural order. How should the tribunal deal with such complexities in the absence of appropriate coercive power? These will be examined in further detail in the next few sections of this article. Such in depth examination can be useful to members of the tribunal, contesting parties, legal representatives as well as experts participating in site inspection.
Rules On The Taking Of Evidence In Arbitration
As mentioned earlier, the claimant bears the onus of proof and therefore is responsible for adducing material evidence to discharge that burden. At the same time, the respondent is entitled to know and respond reasonably in advance to any evidence presented against them as a matter of due process and natural justice. Therefore arbitration proceedings usually adopts rules of evidence based on international standards such as the IBA at the outset to help regulate various matters on the taking of evidence. The IBA rules are usually applied in conjunction with any agreed arbitration institution rules. The said IBA rules typically offers more flexibility than strict rules of evidence of court proceedings by giving the tribunal broad powers to manage the proceedings including issuance of orders for production and admission of evidence.
Under Article 7 of IBA Rules of Evidence of 2020, the tribunal may on its own motion or at the request of a party require the inspection by expert witness of any site, property, machinery, or any other goods, samples, systems, processes or documents as it deems appropriate. The tribunal shall also determine the timing and arrangement for such inspection, in consultation with the parties. The parties and their representatives shall have the right to attend any such inspection.
Since Article 7 of IBA Rules refers to inspection of site by the expert(s) (either party appointed or tribunal appointed), the evidence arising therefrom are essentially expert evidence. It should be noted that expert evidence are generally considered as evaluative opinions of a qualified professional to assist the tribunal in understanding technical issues that are traditionally outside the domain of expertise of arbitrators with pure legal background. It is also noteworthy that expert witnesses do not generally provide factual evidence and are expected to express opinions based on facts included in witness statements. However during the course of site inspection, it is almost inevitable that the experts may learn additional facts surrounding the matter in dispute e.g. the extent of corrosion to the surface of marine piles beyond the records included in witness statement that are likely to be superseded chronologically. If these additional facts are casually included in his expert report, it may amount to provision of supplementary evidence of facts beyond what was previously disclosed by the witness. Therefore the experts participating in site inspection should be advised by legal representatives as regards any admissibility restrictions based on the agreed rules of evidence. Where there are supplementary facts included in expert report, care should be taken to ensure that these are factual investigations necessary for the expert to arrive at his informed opinion. It may be quite different if the expert takes the site inspection as an opportunity to conduct his own fact finding exercise that amounts to being responsive to the counter party’s reply witness statement. In this regard, there could be a case where the adversely affected party’s right is prejudiced where it is deprived of an opportunity to be heard. This is because expert reports are usually produced after parties filed both their witness statements and reply witness statements. Therefore an appropriately worded procedural order with site inspection protocol should be in place ahead of time, which will be examined in the next section of this article.
In reality, if and when supplementary facts are included in expert report arising from site inspection it may not be immediately clear whether these are to assist with the evaluative opinions or purely serve as additional factual evidence post filing of witness statements. Any determination as such is highly sensitive to facts and specific circumstances. Although site inspection is meant for evidence gathering, the types of evidence gathered could be in issue.
Procedural Order For Protocol Of Site Inspection
Protocol for site inspection is a critical document, not only because it provides the logistical arrangement and coordination to facilitate the inspection but perhaps more importantly it ensures that any evidentiary outcome arising from such inspection remains credible. It is challenging to set out a template for such protocol as the arrangements can vary significantly depending on the nature of inspection and matter in dispute. In any case it is customary for such protocol to be issued to the parties by the tribunal via a procedural order pursuant to rules of evidence adopted by the arbitral proceedings.
The protocol is primarily shaped by the key objective(s) of the site inspection set out in specific terms e.g.
“(a) to collect coating samples from five marine piles located at ABC at depth of not exceeding X metres above the lowest tide level”,
“(b) to carry out simulation of hoisting of load of mechanical system in issue based on pre-defined weight at XYZ tonnes and determine whether the mechanical actions are synchronised with the operating software at control room terminals.”
The reason why these objectives are framed in such specific terms is to ensure that any evidentiary outcome from these inspections remain relevant and material to the scope of arbitration. As far as possible, the key objectives should not be couched in broad and vague terms e.g. (a) carry out visual inspection of the hoisting system in issue, (b) to survey the marine piles in issue. Whilst some may welcome such ‘broad’ approach as a way to incorporate flexibility, specificity tends to avoid the site inspection from straying into new issues where neither the claimant nor respondent had raised in their pleadings. By way of example, if the expert embarks on his own fact finding exercise by making fresh observations that the marine piles were reclining possibly due to uneven settlement whereas the issue in dispute was protective coating on the surface of marine piles, this turn of event can be problematic procedurally.
Once the specific objectives are established, it will naturally be clear which parties should participate in the inspection including the appropriate timing. Apart from the usual attendees such as the experts, representatives from both contesting parties as well as their respective legal counsels, there ought to be personnel from the relevant operations or maintenance department of the premises concerned who can assist with the inspection procedures. It is not uncommon that the respondent (or the Employer) may be an entity responsible for property construction with a separate entity in charge of operations of the completed facilities. Therefore the representatives of the respondent may be organisationally distinct from personnel who will provide access to the hoisting system in issue and facilitating the necessary testing procedures as well as physically guiding the experts to the identified marine piles selected for sample extraction and testing. In other words, operational personnels’ availability and participation should be included in the protocol as well as how their roles may interface with that of the experts. The experts’ ability to carry out the investigative works should be in sync with any operational constraints and restrictions that are in place. To the extent that these may curtail the experts’ ability to discharge their independent functions, these challenges should be ironed out in the protocol as well. In essence the experts should ideally be given latitude to carry out investigations but they may not have unfettered access and control over the systems in issue. If both experts have different investigative approaches, and only the respondent’s expert’s approach is permitted due to alleged “operational restrictions”, this creates perception of unfair advantage. This is the reason why site inspection objectives ought to be framed with specificity including method of investigations so as to minimise ‘gamesmanship’ through upfront resolution.
Where the site inspection involved extraction and testing of samples, parties need to agree on the identity of a neutral laboratory testing agency. In this regard, the representative from such testing agency will need to be present during site inspection and be documented in the protocol. If testing can only be carried out during specific period based on tidal information so that the surface areas in issue are not submerged, then timing of inspection can be affected. Additionally there should be a prescriptive protocol relating to chain of custody of evidence to avoid tampering of sample from the point of extraction to the testing of sample. By way of illustration, if there are alleged lack of sufficient protective coating on marine piles, there should be an agreement on the type of chemical compound constituent (e.g. individual element of epoxy coating) that is subject to test which ought to be determinative of the underlying issue.
Timing Of Site Inspection In Arbitration Proceedings
In an ideal world, the need for site inspection for evidence gathering purposes ought to be raised by the requesting party and be included in procedural timetable at the earliest case management conference. However there could be various reasons, rightly or wrongly that the requesting party may not be in the position to determine the necessity for such inspection at the outset. By way of example, the claimant may as a matter of prudence, wish to first appraise the extent of documentary evidence that is available via discovery phase of the proceedings necessary to prove its case. It is also possible that the claimant may wish to first determine the nature of statement of defence and whether there is a need to request for ‘further and better particulars’ in response to the respondent’s case. If the respondent takes issue with the interpretation of the specifications relating to the marine piles and hoisting system in asserting that the claimant was non compliant, the site inspection evidence gathering may not be necessary. The contest between parties then becomes a question of law rather than technical evidence. Any site inspection invariably increases arbitration costs and should not be raised prematurely as it may cause the objective of inspection to be vague. On the other hand, if the request for inspection is raised so belatedly that it delays the evidentiary hearing, the tribunal may decline such request for valid reason. The tribunal is expected to make every effort to conduct the arbitration in an expeditious and cost effective manner pursuant to most arbitration institutional rules.
Given the need to balance between clarity in parties’ case and procedural efficiency, the window within which site inspection requests are typically raised is between the completion of document discovery to the filing of experts’ joint statement (assuming the latter is provided for under the procedural time table). This is because the completion of document discovery generally coincides with the parties’ submission of their respective list of factual witnesses and expert witnesses including associated expert issues. Once parties formulated their issues requiring expert witnesses, it becomes evident whether or not site inspection is necessary taking into consideration the sufficiency of documentary evidence.
By way of procedural context, once document discovery is completed, parties first file their witness statements (including reply witness statements) before proceeding with the filing of their respective expert reports. Experts may be required to produce a joint statement after issuance of their reports, setting out points of agreement as well as disagreement. Expert reports are expected to include evaluative opinions based on facts included in witness statements. Although site inspection request is usually raised within this prescribed window of activities, the experts may be in a better position to assist the tribunal if their site inspection takes place after reviewing all relevant witness statements. This is because the context and factual background of the technical issue can be crucial. By way of example, if it was revealed through factual witness that the hoisting system in issue was an alternative design initiated by the Employer (respondent) through variation order due to space constrain, it may influence the experts’ perspective and lines of enquiries during the site inspection. This could be in the form of appraisal of functional suitability of the alternative model.
In view of the above, the time frame within which site inspection ought to take place can be narrower if parties were to take full advantage of the procedural efficacy. Taking into consideration the logistical complexities in setting up a site inspection including any application and objection to such procedural request, the setting up of any site inspection can potentially be challenging for all parties.
Coercive Powers And Adverse Inference By Tribunal
As the tribunal is the ultimate arbiter of materiality, relevance and weight of evidence, any of its procedural order allowing the requested site inspection indicates that the evidential outcome may have significant impact on the underlying issues in dispute. However parties should be alive to the fact that just because a procedural order for site inspection is made does not necessarily mean that the inspection will be carried out exactly as planned. There could be factors beyond the tribunal’s scope of authority e.g. non adherence to stipulated protocol from site personnel affiliated to the respondent or multiple postponement of scheduled inspection due to alleged lack of manpower to assist. Whilst the evidential hearing including the procedural time table could be deferred to accommodate fresh arrangements, the impact of delay to arbitration may not affect both parties equally. In general, the claimant (i.e. requesting party) may be prejudiced more than the respondent. After all the claimant bears the burden of proof to establish its claims and had been deprived of outstanding payment in consequence of the dispute. Unfortunately the arbitral tribunal lacks the coercive power as that of a state court and therefore could not directly enforce its authority on third parties including those who may be required to assist with the site inspection. Given the tribunal’s responsibility to conduct the proceedings in an expeditious manner as well as balancing any prejudice to the claimant’s rights due to any further delay, the evidential hearing may need to proceed without the benefit of site inspection related evidence. If it is established that these site inspection impediments may have been contributed by the respondent, does the tribunal have the necessary procedural capacity to respond to these circumstances? The short answer is yes, and there are generally three options available to the tribunal which are not mutually exclusive.
Firstly, under Section 28(4) of Arbitration Act 2001 namely the domestic lex arbitri of Singapore, all directions and orders given by the arbitral tribunal in the course of arbitration shall, by leave of the court be enforceable in the same manner as if they were orders made by the court. Failure to comply may amount to contempt of court. Such orders include under Section 28(2)(f) for directions to be given 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. Secondly, the tribunal could assign cost of arbitration based whether a party has failed to conduct itself in good faith in the taking of evidence pursuant to Article 9(8) of IBA Rules. Finally, the tribunal may also infer that the presence of the site inspection evidence would be adverse to the non complying party. In other words, the claimant’s rights in the above mentioned example may not be prejudiced even in the absence of scheduled site inspection.
Conclusion
Apart from having merit in one’s case, it is equally important to be able to navigate effectively in ‘trial within a trial’. Very often even before the evidentiary hearing, there are various applications that can be leveraged at pre-trial phases that may be out of necessity or strategically to enhance one’s legal position. Site inspection for evidence gathering could be one such tools for a procedural strategist.
Koon Tak Hong Consulting Private Limited
