Of the three, Born favoured the law of the place where the lawyer is qualified to practice. External lawyers are often more alert to issues of privilege, and should be well-placed to consider such issues from the perspective of their own legal system. On the other hand, the law of the place where the client is based may present certain difficulties, given that the client may have, as multinational companies often do, multiple regional representative offices across the globe. Of the three tests, Born favoured the law of the origin of communication the least. In his opinion, the place where the communication is made is often fortuitious (and not intended by parties), and as such has little place in the resolution of international disputes.
The 'most favoured nation' approach
In contrast, the 'most favoured nation' approach requires the tribunal to choose the law which offers the most extensive privilege protection to the parties. In short, the 'most favoured nation' approach appears to guarantee that parties' minimum expectations as to the boundaries of privilege are met. Consequently, and perhaps inevitably, this may go on to grant greater privilege protection to a party who may not be expecting it.
Born also considered the 'most protective privilege' or 'most favoured nation' rule, which is preferred by practitioners. His view is that there is only a "superficial appeal" to this approach, as it is difficult to justify granting one party legal rights that it would not otherwise possess simply because its opponent enjoys them. However, he admits that it would be unfair to permit one party to rely on national privilege rules as a reason to withhold relevant materials from disclosure while requiring a counterparty to produce what are arguably similarly situated documents.
The International Bar Association (IBA) 2010 Rules on the Taking of Evidence (the IBA Rules) arguably came closest to creating an international standard on how disputes over privilege should be resolved. The IBA Rules state that an arbitral tribunal must account for "the expectations of the parties and their advisors at the time the legal impediment or privilege is said to have arisen". However, the tribunal must equally consider "the need to maintain fairness and equality as between the parties" when each is subject to different legal and ethical rules. This appears to lend support to the 'most protective privilege rule' in international arbitration.
To go back to our scenario, if the most protective privilege rule is adopted by the arbitral tribunal, the Singaporean company would likely be entitled to rely on its expectation that the documents would be privileged - but it would not then be entitled to compel disclosure of similar documents from its Swiss counterpart.
While academics like Gary Born appear to frown upon the most protective privilege rule for being a tool of rough justice lacking in analytical basis, our view is it would be practical for parties and tribunals to consider adopting the 'most favoured nation' approach. The savings in time and costs from not having parties and arbitral tribunal tussle over the sticky problem of privilege do appear to go some way in promoting expediency and cost-effectiveness in international arbitrations.
Research by Wynne Tay and Jason Yong, international arbitration experts at Pinsent Masons, the law firm behind Out-Law.