In-house advocacy: Last minute changes in case

Have you ever been involved in an arbitration which has radically changed direction at the last minute? Ian Hopkinson offers some thoughts on why this happens, and how to avoid it.

What is the problem? 

In arbitration, an opposing party puts forward a position at the outset of proceedings, often based on limited evidence, and maintains it throughout the written stages of the proceedings, even as the evidence mounts against it. Finally, often very shortly before the hearing, the case you have to respond to changes materially, often undermining much of what has been said by both sides for the majority of the proceedings.

The change inevitably increases costs, as both sides move to adapt their positions, and undermines the possibility of a negotiated settlement by narrowing the issues in dispute.

Why does this happen?

There are many possible explanations for this phenomenon, some or all of which may be at play in a given case. For example:

• Your opponent had a genuine understanding of its case at the outset, but that understanding was not correct in some important respect. Perhaps it was based on less than the whole picture, or depended on a misapprehension.
• Your opponent has a limited budget for the proceedings, and instructed its lawyers to restrict work on the case, meaning that its case could not adapt adequately to new evidence as the case developed. Alternatively, your opponent’s lawyers and / or expert witness(es) have not engaged with the changing case for other reasons.
• Your opponent has a bad case on the merits, and the proceedings have been brought and / or maintained for partly tactical reasons.
• Your opponent has chosen to instruct an advocacy team for the hearing which has not been involved in the case until that point. The new team has identified a problem with the existing case, or has a different view of it, and the direction of the case has changed accordingly.
• Your opponent or its lawyers have chosen to change the case at the last minute for reasons which are purely tactical, or which seek to gain tactical advantage from one or more of the pre-existing factors above.

Is this just an arbitration phenomenon?

While this is not an issue which occurs solely in arbitration, arbitration is arguably more vulnerable to it than, for instance, the English courts.

For instance, the English courts have specific procedures and requirements for amendments to statements of case, which are generally expected to accord with the case actually being advanced. Generally permission of the court, or at least consent of the other parties, is required to amend. This arguably concentrates parties’ minds on ensuring that their cases are responsive to changing evidence. 

In arbitration the position is less prescriptive. There is arguably a presumption under some rules in favour of amendment. For example, under the UNCITRAL Arbitration Rules, a party may amend or supplement its claim “unless the arbitral tribunal considers it inappropriate to allow such amendment or supplement having regard to the delay in making it or prejudice to other parties or any other circumstances.”

The English Arbitration Act 1996 obliges the Tribunal to act fairly and impartially as between all parties, giving each a reasonable opportunity of putting its case and dealing with that of its opponent(s); and duty to adopt procedures suitable to the circumstances of the arbitration, avoiding unnecessary delay and expense, so as to provide a fair, efficient and expeditious means for the final resolution of the parties' dispute.

On the other hand s.34 Arbitration Act 1996 leaves it for the tribunal to decide all procedural and evidential matters, including whether statements of claim may be amended, subject to the right of the parties to agree on any matter. Therefore the duty to act fairly and impartially cuts both ways. While it may cause a Tribunal to reject a very extensive series of amendments, that Tribunal will also need to be careful that it is not accused of restricting the amending party’s ability to put its case.

Therefore while some requests for amendment to a stated case at a late stage of proceedings are clear cut, there is lots of middle ground. The need for new evidence may be determinative, but Tribunals must assess whether there is genuinely a need for new evidence or whether there is something less than that.

A frequent course taken by Tribunals is to allow amendments, even at a late stage, but subject to an appropriate right to reply, even if that right to reply is time limited, or there is the spectre of some future unidentified costs sanction. Perhaps last minute changes in case are largely seen by Tribunals as part of the cut and thrust of arbitration, though if so care must be exercised to ensure that they are not used as tactical tools when the case should have been amended earlier.

What can one do to limit the risks of a last-minute change in case?

A number of institutional rules contain obligations on all parties to put their case. The default position in the LCIA Rules, for instance, is that each party should set out in its written submissions ‘in sufficient detail the relevant facts and legal submissions upon which it relies, together with the relief claimed against all other parties and the documents relied upon.’ Parties might be well advised to ensure that they are doing so, and that their opponents are doing the same. That can be done both in the submissions themselves and, where necessary, in open correspondence. 

When faced with a last minute change in case, it is important to act swiftly to identify the precise nature of the change, and what response one might need to make. In particular one should consider whether the change will genuinely require further evidence, or existing evidence to be revisited and whether it will be possible to gather this evidence in the time allowed. Parties should also seek to understand the timing of the change in case and consider whether it could have been made earlier.

Conclusion

Ultimately it should be in the interests of all parties to arbitration to understand clearly the case which they have to meet, and the facts upon which it is said to be based at the earliest reasonable oppportunity. Only with that understanding is it possible to narrow the issues, and to achieve the best chance of resolving the dispute in the most efficient and cost effective way. 

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