Here I am referring to a particular MV SWGR from ABB Unigear type ZS1 (http://www.abb.com/product/db0003db004279/c125739900636470c1256a690029a3e2.aspx?productLanguage=us&country=00) which is internal arc proof as per catalogue.
Just to make it clear: The switchgear has three separate segregated sections one each for bus, breaker and circuit.

I have one particular operation where prior to earthing the circuit (done with doors closed), I will have to test the circuit spouts with appropriate tester for proving it dead (Working distance ~ 1000mm). Before opening the circuit section door for testing (lowest one), I would have opened the breaker (middle section) and isolated it as well. Would there still by any arc flash hazard while testing of circuit spouts now? If yes, can you explain me how?

Thanks

If there is no possibility of the circuit spouts being energized, why is there a need to test them?

If there is a possibility of them being energized, then there is a possibility of an arc.

Rule of thumb is the circuit is NOT safe until the grounds are on. Testing voltage for verification that the circuit is open, is subject to full PPE requirements. You test to verify something didn't fail, like one leg staying closed. After grounds are on, no electrical PPE is required.