(c) 2023 Eric S. Sherby
Tel Aviv Arbitration Week often provides an opportunity to contrast how typical issues in dispute resolution are dealt with in Israel as opposed to how they are dealt with abroad.
Edna Sussman, a leading international arbitrator based in New York City, was a speaker on the panel concerning the valuation of damages and expert testimony. One of the other panelists suggested that an arbitrator could allow each party to file its own expert opinion or, alternatively the arbitrator could appoint a “tribunal-appointed” expert as the only expert in the case. In response, Ms. Sussman stated that she generally refrains from appointing her own expert – she added that she prefers to allow each party to appoint its own expert. One of the reasons given by Ms. Sussman is that an arbitrator should avoid being in a position of possibly having to reject the opinion of the expert whom she appointed.
The explanation given by Ms. Sussman on the issue of whether an arbitrator – or a court – should use a “tribunal-appointed” expert was a very refreshing one, especially for the Israeli audience. Here’s why:
- Implicit in the approach outlined by Ms. Sussman is that, as necessary, she would reject expert testimony from a tribunal-appointed expert – even if she, as arbitrator, appointed that expert.
- Sussman’s approach indicates that the mere fact that she, as arbitrator, appointed an expert would not stand in the way of her exercising her own independent judgment with respect to the sufficiency of the work of, or the conclusions of, that expert.
Israeli litigators are used to the fact that Israeli courts address the issue of expert testimony very differently from the manner outlined above. In the typical civil case in which each party files its own expert opinion, it is common for the Israeli court to decide that, rather than go through the process of scheduling the cross examination of both experts, the court should appoint its own expert. When the court so acts, the two sides (generally) pay the fees of the court-appointed expert – and it should be noted that they do so after each side already paid the fees of the expert that it retained. (Although Israeli procedural rules regarding the use of expert testimony changed somewhat as of January 1, 2021, those changes had/have little effect on the manner by which Israeli courts grapple with the question of whether to appoint an expert independent of the parties.)
The other reality of the use by Israeli courts of expert testimony is that, as a practical matter, the moment counsel for the litigants see the report filed by the court-appointed expert, they know to a great extent how the final judgment will read on the issues relating to expert testimony. In other words, Israeli lawyers know that the level of scrutiny by a court of the conclusions set forth in the opinion of the court-appointed expert is unremarkable.
Ms. Sussman’s approach to expert testimony is not unique. In our experience, the approach that she outlined in her talk is common among leading international arbitrators in those legal systems that are characterized by vigorous cross-examination of experts. For Israeli companies that believe that most of their (likely) business disputes with non-Israelis will “sink or swim” based upon expert testimony, the approach described by Ms. Sussman is a good reason to select arbitration as the dispute resolution mechanism in international contracts.