Language related issues in international arbitration
By Matteo Zanotelli, SLT Strategy Legal Tax
On the basis of personal, professional knowledge and some very hands-on experience in the field of international commercial arbitration, this article aims to shed some light on a particular underestimated aspect of arbitral proceedings, with the hope of alerting professionals and business operators to a few preventable mistakes in contract drafting.
This often disregarded, although core, detail in a well-drafted arbitral clause consists of the parties’ choice of the arbitral proceedings language.
When negotiating all aspects of the dispute resolution method of choice for disputes arising out of the contract, the parties shall decide upon details, such as the administering body (in case of an institutional versus ad hoc arbitration), the body of rules that shall govern the proceedings, the number of arbitrators sitting on the panel and the language of the proceedings.
The arbitral language defines not only the offcial language in which motions and memoranda shall be drafted or arguments shall be presented during the hearings, but also the language in which documents shall have to be translated for them to be considered by the arbitral tribunal(s) and admitted to the proceedings.
Thus, a lack of choice or a poor choice by the parties may lead to hurdles and unpredictable costs in the administration of the proceedings that may have otherwise been avoidable; normally, if the parties have not previously chosen or have not agreed on the language to be used during the arbitration, the Arbitral Tribunal is entitled to establish the language it deems appropriate for the proceedings (see art. 22 ICC Arbitration Rules 2017).
As a consequence, the choice of a language that one of the parties does not understand or speak fluently may call for the need of a translator and the arising of costs in connection therewith, should the parties need to render statements during hearings.
Similarly, the choice of a language that the parties have never used during their contractual relationship may trigger enormous costs and delays caused by the need for all documents to be translated before submission.
Most radically, the submission of a document not duly translated in the offcial arbitration language may cause said document to be excluded from the proceedings, with the possibility of serious consequences on the probative process and, potentially, the ultimate result of litigation.
The need for translation in the first place bears the risk of creating misunderstandings, excluding language nuances and – in the most dramatic scenario and regardless of the translator’s good faith – an incorrect translation.
In situations where the parties have been arbitrarily using different languages in email exchanges, negotiation and in the drafting of the contract, a homogeneous and cohesive translation and preservation of the original meanings may be hard to achieve.
A possible solution may therefore entail that the parties have the far-sightedness to adopt the most cohesive approach, from negotiation all the way to litigation.
The use of a common language, which is incorporated into the arbitral clause and used throughout the proceedings, as well as the extensive use of definitions in the contract, may indeed save the parties time and money in the long run.
While sometimes definitions may seem like a trivial detail dictated by excessive scrupulousness, their use provides for a predetermined, common ground of understanding the contract language and they ultimately spare the parties delay and fatigue when a disagreement arises.
Beside the management of the documentary evidence in the proceedings, the language may be a critical point when a witness has to be examined in a language other than the one used in the arbitral proceeding.
As everyone knows, the IBA Rules on the Taking of Evidence in International Arbitration, allows witnesses to render their testimony in the language they prefer; as a consequence, a simultaneous translation shall be provided by an independent interpreter appointed by the Tribunal.
In such a case, the importance of verifying the accuracy of the translation rendered by the interpreter must not be underestimated; irrespective of the (highly improbable) wilful misconduct on the interpreter’s part, a discrepancy (in good faith) between the original version of the testimony and its translation may occur (especially in proceedings related to technical issues).
It may be best, as an additional precaution, to have present a bilingual representative capable of catching any discrepancy in the translation, at least for the key witnesses of the proceedings.
It thus falls upon professionals and business operators to maintain a consistent line of management during the entirety of the parties’ business relationship and not undervalue the power of the seemingly unimportant detail of the contract language.
Matteo ZanotelliSLT Strategy Legal Tax, Verona, Italy
T: +39 045 806 51 51
SLT Strategy Legal Tax is a Veronabased firm that provides both legal and accounting services to a national and international clientele. The firm can count on the experience of over 40 professionals whose experience covers many areas of expertise, ranging from commercial, insolvency and banking law to criminal, family and labour law.
Matteo Zanotelli is a lawyer and member of the Professional Lawyers’ Association of Verona as well as a Senior Partner at SLT Strategy Legal Tax. His professional activity encompasses assistance to companies and other economic operators, mostly handling insolvency procedures, international trade law and banking law matters. He specialises in international contract consultancy and drafting, operations of company reorganisation and internationalisation, international litigation and banking litigation. He is a published author and speaker at events of a scientific and academic nature.
Published: Autumn 2018 l Photo: Viktor Cap 2013 - stock.adobe.com