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There are several elements in international arbitration which cannot be predicted at the outset of a dispute. It is important for parties to appreciate this and be ready to respond to the unexpected, as Ben Giaretta and Katherine McMenamin of Ashurst’s Singapore office explain.
At the start of a dispute, it is best practice to set down on paper an analysis of the issues and a plan for what will need to be done during the arbitration in order to achieve your goals. But you should also be conscious of what cannot be known at that stage, and how the picture may evolve. Donald Rumsfeld once famously stumbled over "known unknowns"; a number of these can be identified in international arbitration.
A tribunal applying English law will assess a contract objectively (Chartrook v Persimmon Homes Ltd  UKHL 38). As a result, even the people within your organisation who negotiated the contract may not be able to say what it "means". Their explanations may help you identify the issues, and you may present persuasive arguments for a particular interpretation, but how the tribunal will view a contract is a further step that is ultimately outside your control.
Competent counsel can advise you what the applicable law is at the outset of a dispute. But any legal advice reflects the facts that are known at that time, and it can change as more facts come to light. Also, laws are dynamic: they can evolve during the course of an arbitration. It is important therefore to keep legal advice under review and monitor legal developments to assess how these may affect your case
A document retention policy is part of a company's risk management process, and, if adhered to, can set up a company well for a dispute. We live in a world of information overload, however. It is easy for employees to file documents in the wrong place, for documents to be deleted by mistake, or for messages to be transmitted outside the normal document retention system (for example, text messages between individuals). These may all emerge to affect the presentation of your case after a dispute arises. The significance of documents may also change in light of witness evidence: different emphases may appear which cannot be seen on an initial reading.
As Aristotle observed, people have differing abilities both to store memories and subsequently recall these (Aristotle, on Memory and Reminiscence). A witness' evidence may turn out to be limited in a manner that is not at first anticipated, if they did not commit the evidence properly to memory in the first place; and, while various techniques may be used to assist with recovering memories – by revisiting the documents, for example – a witness may still struggle to recall. Even if a witness has a good memory, they may not be able to convey their evidence well to a tribunal at a hearing. Finally, individuals cannot be stored like documents on a database: they may move on, or decide later not to participate in the arbitration.
Unexpected events, such as the discovery of new evidence, can result in applications from one party or the other to amend the timetable. Exceptional incidents can also occur that affect an arbitration, such as a witness or an arbitrator falling ill. These can disrupt and delay, and result in additional costs.
There is a risk that you may underestimate or overestimate the other party, and the presentation of their case may take an unexpected turn. A common mistake is to assume you can understand the other side's position on the basis of what you know and what you would regard as rational. It is better, as the psychologist George Miller recommended, to assume as a starting-point that what they are saying is rational from their point of view, and then work out why they are taking that position (Miller’s Law – i.e. to understand what another person is saying you must assume that it is true and try to imagine what it could be true of).
Lord Scarman once memorably observed that in developed societies, "justice … is not left to the unguided, even if experienced, sage sitting under the spreading oak tree" (Duport Steels Ltd v Sirs  1 WLR 142 (HL). His point in the particular case was that judges must be obedient to the will of the legislature when interpreting statutes; but he also recognised that judges (and arbitrators) have considerable discretion, within certain limits. A party that is advised by experienced counsel may be able to anticipate how a tribunal will exercise its discretion in many respects. However, such discretion defeats precise scientific analysis and may result in unexpected outcomes. This is true even if arbitrators are well known: their reactions to particular issues may not be as expected, while the dynamics of a tribunal and interplay of personalities between arbitrators may also have an unanticipated impact
There are good reasons why you should be conscious of these "unknowns". Firstly, at the beginning of a dispute you should be wary of false certainties, both those that you derive yourself from the evidence and those promoted by others. As JK Galbraith once said of economists attempting to predict the future, "There are two kinds of forecasters: those who don't know, and those who don't know they don't know" (Wall Street Journal, 22 January 1993). Being aware of this can help you communicate the right messages within your organisation.
Secondly, you should be ready if something unexpected happens during a dispute. Contradictions can be hard to stomach. Psychologists refer to the mental stress resulting from holding inconsistent or contradictory ideas at the same time, or from being confronted by new information that conflicts with existing beliefs or values, as "cognitive dissonance". It drives individuals to take steps to achieve consistency. Mediators may use this to broker a deal: they may point out certain uncomfortable facts, for example, in order to make a party "see sense". In arbitration, when faced with the unexpected, a party may react in a way that means they end up damaging their own interests, in their efforts to recover consistency: they may rationalise, distort or even ignore the turn of events which was not previously anticipated. On the other hand, if you are ready for a shock to the system, you will be more open to turning it to a positive: you can use it as an opportunity to reassess your position, to review your goals and to find a solution to the dispute.
This article was first published by Ashurst in February 2015, and is reproduced with permission.
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