Duty to preserve documents in litigation and arbitration in Singapore and Hong Kong

Out-Law Analysis | 28 Jun 2022 | 2:45 am | 6 min. read

Discovery is a very important stage in civil litigation. Upon receipt of an order for discovery, each party must disclose to the other side the documents it possesses, unless it can rely on grounds such as privilege.

In arbitration, similar document disclosure obligations can be found in the relevant jurisdiction’s arbitration law or institutional rules, or imposed by agreement of the parties.

For documents to be made available for the other side’s inspection, they must be preserved properly at the outset. Parties and their lawyers should therefore consider a document management system long before any disputes are in contemplation.

General duties on parties

In both Singapore and Hong Kong Special Administrative Region (SAR), parties are expected to preserve documents that may need to be disclosed in litigation proceedings, and their lawyers have a duty to properly advise them of these obligations. Each jurisdiction sets out good practices that businesses should follow to ensure compliance with their document retention obligations. Clients that fail to comply may be held in contempt of court, have pleadings struck out or adverse inferences drawn against them, as punitive measures. Lawyers found to have suppressed evidence may be guilty of improper conduct or be struck off the roll and have a duty to cease to act if instructed not to disclose relevant documents.  

Therefore, even before considering litigation, parties should put in place a comprehensive document management system, including a data retention policy and policies for the preservation of electronic documents and their collection or retrieval in the event that any legal proceedings are anticipated. In practice, this may occur before formal legal proceedings are commenced. For example, litigation can be considered ‘commenced’ when an opposing party has communicated its intention to bring suit prior to formally filing the claim in court.

The concept of litigation holds can be explained to employees in advance and included in the company's data retention policy. It is also important for clients to communicate with their lawyers to understand the disclosure responsibilities in a particular jurisdiction and seek clarification if they are unsure of the steps they should or should not take.

In arbitration, the parties are free to agree on the applicable rules regarding the disclosure of documents under any mandatory law of the seat, and in many cases will adopt the International Bar Association Rules on the Taking of Evidence in International Arbitration (2020)(IBA Evidence Rules), or the IBA Rules on Party Representation in International Arbitration (2013) (IBA Representation Rules) as guidelines. Although consequences tend not to be as severe as the court penalties for failure to disclose, these rules require parties to produce documents in their possession and for party representatives to refrain from suppressing or concealing documents that the client has been ordered to produce, or risk adverse inferences being drawn against them.

Where the disclosure phase can in some cases determine the outcome of the arbitration, these rules remain an important reminder to parties and counsel of their obligations to preserve relevant documentation or risk the tribunal making inferences in respect of those missing documents which are detrimental to their case.

Specific duties in Singapore

For litigants in Singapore, the duty of disclosure is statutorily prescribed in order 11, rule 1 of the Rules of Court 2021 (the RoC). While there is no express mention of the duty to preserve documents in the RoC, the Singapore court clarified in Koh Teck Hee v Leow Swee Lim that the duty of disclosure includes “not destroying documents which might by possibility have to be disclosed”.

Lawyers in Singapore also have a duty to explain to their clients the extent of their disclosure obligations in court proceedings. In Teo Wai Cheong v. Crédit Industriel et Commercial, the Singapore Court of Appeal held that a lawyer is “duty bound, as an officer of the court, to carefully go through the documents disclosed by the client in order to ensure that, as far as possible, no relevant documents have been omitted”. However, this duty will be tempered in appropriate cases, especially those involving voluminous documents requiring some degree of delegation.

There are consequences for both litigants and lawyers if they violate these duties. For litigants, delayed responses to proper requests for disclosure may lead to costs of the resulting specific discovery application ordered against them. If specific discovery orders are not complied with order 11, rule 7 of the RoC empowers the court to dismiss the action or strike out the defence; to draw an adverse inference or make such order as the court deems fit; to punish the party for contempt of court; or to order that the party may not rely on any document within the scope of the order unless approved by the court.

For lawyers, failure to prevent a client from suppressing evidence may amount to improper conduct or practice that renders one liable to be struck off the roll. As held in Law Society of Singapore v. Nor’ain bte Abu Bakar, a lawyer instructed by his client to not disclose a document within the scope of a discovery order must cease to act for that client.  

In the realm of international arbitration, section 12(1)(b) of International Arbitration Act (IAA) empowers Singapore-seated tribunals to make orders or give directions to parties for the disclosure of documents. Section 12(1)(f) of the IAA also empowers the tribunal to make interim orders for the preservation of evidence. Neither the IAA nor the Singapore International Arbitration Centre (SIAC) rules impose the Singapore litigation rules on Singapore-seated tribunals, and tribunals have a broad latitude to determine arbitral procedure that includes how evidence is taken and assessed. 

The Singapore courts adopt the stance of pro-arbitration judicial reticence. Hence, arbitral parties are only allowed to seek such orders from the courts if the tribunal has no power or is unable for the time being to make such orders, for example where preservation of evidence is necessary before the tribunal has been constituted, in accordance with section 12A of the IAA.

In practice, parties and tribunals often agree to adopt the IBA Evidence Rules or IBA Representation Rules as guidelines for conduct during the proceedings. Article 3(7) of the IBA Evidence Rules requires a party to produce all documents in its possession, custody or control which are relevant to the issues in the case and material to the outcome of the dispute, as ordered by the Tribunal. Failure to produce documents without satisfactory explanation may lead to an application for adverse inferences to be made under Article 9(6).

Under the IBA Representation Rules, guideline 12 requires a party representative to inform the client of the need to preserve documents so far as reasonably possible from deletion which might otherwise be in accordance with its document retention policy, and Guidelines 15 and 16 require party representatives to advise clients to produce documents.

Specific duties in Hong Kong SAR

In Hong Kong SAR, there is a duty to preserve documents which might have to be disclosed in litigation and there might be adverse consequences for failure to comply with this disclosure duty. For example, in Tang Hing Kwong (Tang) v John David Andrew Ip, where the defendants sought to strike out a claim on the ground that Tang’s delay has caused them serious prejudice, one of the reasons why the judge refused to uphold the Master’s decision to strike out the claim was “the defendants' unexplained failure to preserve any of the purported relevant evidence made their own conduct at least contributory to the alleged prejudice”. Even if no adverse inference was drawn, the failure to preserve documents might lead to adverse costs consequences, as in the case of Earles v Barclays Bank Plc.

Practice Direction SL1.2 (“PD SL1.2”) in Hong Kong SAR provides a framework for reasonable, proportionate and economical discovery and supply of electronic documents for cases in the Commercial List. Paragraph 7 of the PD SL1.2 expressly sets out the need to preserve discoverable documents, including electronic documents which might be deleted in accordance with a document retention policy or be deleted in the ordinary course of business, and native electronic documents, even if the same electronic documents are disclosed in another format.

Understandably, clients cannot always be expected to fully understand or appreciate their duties of discovery and preservation of documents without advice from their acting lawyer. An important aspect of the PD SL1.2 is the obligation placed on legal representatives to notify their clients of the need to preserve discoverable electronic documents as soon as litigation is contemplated, even where a conflicting document retention policy exists.

Therefore, legal practitioners, including in-house legal advisers, have a duty to take positive steps to ensure that the client appreciates at an early stage of the litigation, the duty of discovery and the importance of not destroying documents which might have to be disclosed.

In arbitrations in Hong Kong SAR, parties are not bound by strict evidential rules and are free to set out by agreement the terms and mode of disclosure. Under section 47 and 56 of the Arbitration Ordinance (AO) (Cap.609), if there is no such agreement, the arbitral tribunal can exercise its discretion to order for the disclosure of documents or the delivery of interrogatories.

However, the arbitral tribunal cannot order a party to produce any document that the party could not be required to produce in civil proceedings before a court, such as privileged documents (section 56(9) of the AO). The parties and the arbitral tribunal also commonly refer to other arbitral rules for guidance, such as the IBA Evidence Rules or IBA Representation Rules.

Co-written by Bae-Huey Tan and Stephanie Ching of Pinsent Masons.