Laying the fourth arbitrator to rest: re-evaluating the regulation of arbitral secretaries

Laying the fourth arbitrator to rest: re-evaluating the regulation of arbitral secretaries Abstract Despite significant efforts to improve the transparency of international arbitration, the spectre of arbitral secretaries as the ‘fourth arbitrator’ still haunts the arbitral process. Efforts to clarify and codify the role of arbitral secretaries have failed to assuage the perception that, at least on occasion, arbitral secretaries may exceed the appropriate limits of their responsibilities. This can only be harmful to the legitimacy of the arbitral process. Against the backdrop of the rise of transparency in international arbitration, this article sets out to re-evaluate the role of arbitral secretaries in modern international arbitration. Having first considered the efforts that have already been made to address the perceived problem of the fourth arbitrator, the article draws on two cases studies—the well-known Yukos cases and the lesser-known, long-running boundary dispute between Guyana and Venezuela—to highlight both the importance of transparency as it applies to arbitral secretaries, and the importance of its limits. In the light of those cases, the article proposes certain measures that may, finally, allow us to lay the fourth arbitrator to rest. Sixteen years ago, in this very journal, an author raised the spectre of arbitral secretaries as the ‘fourth arbitrator’.1 In doing so, the author sought not to describe ‘a state of affairs that is presently believed to exist’ but to address a growing concern at what was then ‘perceived to be the excessive role of some of these assistants’.2 Since then, there have been significant moves towards greater transparency of the arbitral process as a whole, and, against that backdrop, towards greater codification of the role of arbitral secretaries3 in particular. Yet despite these developments, the perception that some arbitral secretaries may be overstepping the bounds of their remit persists.4 That it does so, the best part of two decades after the term ‘fourth arbitrator’ was first coined, can only be detrimental to the legitimacy of the arbitral process. This article therefore sets out to re-evaluate the role of arbitral secretaries in modern international arbitration. Against the background of the rise in transparency in international arbitration, it first considers what efforts have been made in the intervening years to address the perceived problem of the fourth arbitrator. In the light of contemporary practice, the article then considers two cases—the well-known Yukos cases and the lesser-known, long-running boundary dispute between Guyana and Venezuela—which illustrate both the importance of transparency as it applies to arbitral secretaries, and the importance of its limits. Drawing on those cases, the final section then suggests certain measures that may, finally, enable us to lay the fourth arbitrator to rest. 1. THE RISE OF TRANSPARENCY IN INTERNATIONAL ARBITRATION The present preoccupation with transparency in international arbitration has its origins in concerns as to the accountability of investment treaty arbitration. As early as 2001, an article in the New York Times said of tribunals established under the North American Free Trade Agreement:5 Their meetings are secret. Their members are generally unknown. The decisions they reach need not be fully disclosed. Yet the way a small group of international tribunals handle disputes between investors and foreign governments has led to national laws being revoked, justice systems questioned and environmental regulations challenged. This perceived lack of accountability, together with misgivings as to whether expansive interpretations of investment protection standards have begun to sacrifice sovereign discretion in favour of investor protection, has, some have argued, given rise to a ‘backlash’ against investment treaty arbitration.6 This has been manifest in denunciations of the ICSID Convention,7 cancellation (or the threat of cancellation) of bilateral investment treaties,8 and large-scale public protests against proposed multilateral investment treaties, notably the Transatlantic Trade and Investment Partnership. This increasingly hostile political climate has engendered a number of developments to improve the transparency of the international investment regime, amongst them the 2014 UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, the 2015 Mauritius Convention on Transparency,9 and the UNCITRAL Transparency Registry. The broad thrust of these initiatives has been to begin to address the ‘public interest in transparency in treaty based investor-State arbitration’,10 responding to a key criticism levelled against investor-State arbitration since its inception, that investment tribunals frequently decide matters of public importance behind closed doors. But although investor-State arbitration has been the focal point for the push for greater transparency in international arbitration, recent years have also witnessed a number of initiatives, often led by arbitral institutions, aimed at increasing the transparency of international arbitration more broadly. In 2015, the London Court of International Arbitration (LCIA) became the first leading arbitral institution to publish figures for the costs and duration of its cases. As the LCIA noted, users of international arbitration had ‘expressed a strong interest in institutions publishing such data’, which, the LCIA concluded, would ‘contribute to informed decision-making by providing transparency in relation to costs and duration’.11 In the same year, the Vienna International Arbitral Centre (VIAC) took the step of publishing anonymized summaries or extracts of awards.12 Explaining its decision, the VIAC observed that it was ‘time to draw back the curtains and thereby provide greater insight into the work of the institution as well as that of arbitral tribunals appointed under its auspices’.13 More recently, the International Chamber of Commerce (ICC) has begun publishing on its website the names and nationalities of all arbitrators sitting in ICC cases. The listing also identifies whether the appointment was made by the ICC Court or by the parties, the identity of the tribunal chairperson and any changes in the tribunal’s composition. Further, the amended Article 11(4) of the 2017 ICC Rules now permits the ICC Court to provide reasons for the appointment, challenge, or replacement of an arbitrator, something which was previously expressly prohibited.14 Notwithstanding such initiatives—which, in themselves, remain piecemeal—misgivings about any further intrusion of transparency into the sphere of commercial arbitration appear to remain commonplace.15 Such sentiments are easy to understand. Perhaps now more than ever it is tempting to believe that confidentiality has become even more of a virtue of the arbitral process. The less publicity our process attracts—so this argument might go—the better it will be able to perform its justice function with professional quality and efficiency. On the other hand, as this author has argued elsewhere,16 such sentiments may underestimate the hidden costs of confidentiality. For while international arbitration is, above all, a means of resolving particular commercial disputes in the context of particular commercial relationships that rarely will be helped by unnecessary publicity, the paucity of information about what takes place in arbitrations can make the process less predictable for all participants, which, in turn, risks undermining the legitimacy of a process that those same users depend upon. The tension between these positions has been evident in efforts to regulate the function of arbitral secretaries. Against the backdrop of the move towards greater transparency of the arbitral process as a whole, the last sixteen years (since the spectre of the fourth arbitrator was first raised) have witnessed numerous attempts to codify the role of the arbitral secretary, underlying which is the presumption that more transparency is indeed required in respect at least of that facet of arbitral procedure.17 And while some commentators have raised legitimate reservations about such efforts at codification,18 the available evidence suggests that these attempts are responsive to a desire among users and practitioners for greater clarity in respect of the role of arbitral secretaries. 2. ATTEMPTS TO CODIFY THE ROLE OF ARBITRAL SECRETARIES There appears to be relatively widespread agreement that ‘[w]ith appropriate direction and supervision by the arbitral tribunal, an arbitral secretary’s role may legitimately go beyond the purely administrative’.19 This is the conclusion of perhaps the most thoroughgoing study of arbitral secretaries, the Young International Council for Commercial Arbitration (ICCA) Guide on Arbitral Secretaries, which, drawing on two surveys of international arbitration practitioners, users and providers, seeks to establish a comprehensive list of best practice principles for the appointment and use of arbitral secretaries.20 Beyond that, however, there is significant divergence of practice. The ICCA Guide elaborates that an arbitral secretary’s tasks may include, among other things, ‘[r]esearching questions of law; [r]esearching discrete questions relating to factual evidence and witness testimony; [d]rafting procedural orders and similar documents; [r]eviewing the parties’ submissions and evidence, and drafting factual chronologies and memoranda summarizing the parties’ submissions and evidence; [a]ttending the arbitral tribunal’s deliberations; and [d]rafting appropriate parts of the award’.21 At present, this seems to represent the high watermark in terms of leeway afforded to arbitral secretaries, from which most arbitral institutions have retreated in at least some respects. Most comparable are the Hong Kong International Arbitration Centre's (HKIAC) June 2014 ‘Guidelines on the Use of a Secretary to the Arbitral Tribunal’, which may be adopted by parties to arbitrations administered by the HKIAC under the HKIAC Rules or the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules.22 The Guidelines allow a secretary to perform ‘organisational and administrative tasks’23 and, unless the parties agree or the tribunal directs otherwise, also to conduct legal research; collect case law or published commentaries on legal issues defined by the tribunal; research discrete questions relating to factual evidence and witness testimony; draft memoranda summarizing the parties’ submissions and evidence; attend the tribunal’s deliberations; and prepare drafts of non-substantive parts of the tribunal’s orders, decisions, and awards (such as procedural histories and chronologies of events).24 The Guidelines also require a proposed secretary to sign a declaration of availability, impartiality, and independence prior to his or her appointment.25 Somewhat more restrictive, is the approach of the ICC. In October 2017, the Secretariat of the ICC International Court of Arbitration published a Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration,26 which sets out guidance on the appointment, duties, and remuneration of an arbitral secretary. Like the HKIAC, the ICC also envisages that secretaries’ duties may extend beyond ‘organisational and administrative tasks’ to include attending deliberations and performing legal research.27 However, the Note also strictly limits the role of the arbitral secretary, inasmuch as it requires that ‘[u]nder no circumstances may the Arbitral Tribunal delegate decision-making functions to an Administrative Secretary’ and that a ‘request by an Arbitral Tribunal to an Administrative Secretary to prepare written notes or memoranda shall in no circumstances release the Arbitral Tribunal from its duty personally to review the file and/or to draft any decision of the Arbitral Tribunal’.28 The 2017 Note also provides that before an ICC tribunal appoints a secretary it must inform the parties of its proposal to do so.29 The tribunal must then submit to the parties the proposed secretary’s curriculum vitae and a declaration of independence and impartiality, which is ‘an undertaking on the part of the Administrative Secretary to act in accordance with the present Note and an undertaking on the part of the arbitral tribunal to ensure that this obligation on the part of the Administrative Secretary shall be met’.30 The LCIA’s Notes for Arbitrators envisages a comparable scope of tasks, including that an arbitral secretary may attend hearings, meetings, and deliberations.31 However, following changes to its Notes for Arbitrators in October 2017, the LCIA now provides that the precise tasks carried out by the secretary to any given tribunal, together with the secretary’s rate of remuneration, must be agreed with the parties.32 There also remain a number of institutions that offer more limited guidance as to the appropriate scope of an arbitral secretary’s role. The Arbitration Institute of the Stockholm Chamber of Commerce (SCC) Arbitration Rules 2017 compel the tribunal to ‘consult’ the parties regarding the task of the arbitral secretary and state that the tribunal ‘may not delegate any decision-making authority to the administrative secretary’.33 The SCC’s 2017 Arbitrator’s Guidelines further provide that, subject to any agreement of the parties to the contrary, ‘the administrative secretary’s duties shall be limited to organizational, clerical and administrative functions’, but does not include any guidance on what that might entail.34 The Singapore International Arbitration Centre (SIAC) is even more taciturn on the subject. Its 2015 Practice Note on Appointment of Administrative Secretaries provides guidance on when a secretary may be appointed and the basis on which a secretary can be remunerated; however, other than providing that a secretary may only be appointed with the consent of all the Parties, it does not cover the scope of a secretary’s duties in SIAC arbitrations, leaving this instead to be agreed between the parties.35 As to the UNCITRAL Notes on Organizing Arbitral Proceedings, published in 1996 to ‘assist arbitration practitioners by listing and briefly describing questions on which appropriately timed decisions on organising arbitral proceedings may be useful’,36 these are limited to describing the state of practice at that time. They note that the use of arbitral secretaries for ‘purely organisational’ tasks is ‘usually not controversial’ but that ‘[d]ifferences in views’ may arise if the secretary’s tasks include matters such as ‘legal research’, ‘preparing summaries from case law and publications’ or ‘preparing drafts of procedural decisions or drafts of certain parts of the award’ and that ‘[v]iews or expectations may differ especially where a task of the secretary is similar to professional functions of the arbitrators’.37 2.1 The Yukos cases Precisely such a difference in views and expectations was at the heart of the now infamous dispute surrounding the role of the arbitral secretary in the Yukos cases, themselves heard under the UNCITRAL Rules, which may serve to illustrate the dangers of a perception of insufficient transparency in the role of the arbitral secretary. This story began in November 2004, when three shareholders of the now defunct Yukos Oil Company—Hulley Enterprises Limited, Yukos Universal Limited, and Veteran Petroleum Limited—commenced three separate but parallel arbitrations administered by the PCA under the UNCITRAL Arbitration Rules against the Russian Federation,38 based on allegations that Russian had employed a combination of bad faith tax assessments and criminal proceedings to bring about the effective dispossession and destruction of Yukos’s assets. The three parallel arbitrations were conducted in a single set of proceedings. At the first organizational hearing on 31 October 2005, the arbitral tribunal appointed an ‘Assistant to the Tribunal’,39 apparently to provide administrative assistance and exercise liaison duties.40 At the time of his appointment, the individual in question—Mr Martin Valasek—was a relatively junior lawyer; however, arbitration not always being a quick process, by the time the arbitration resulted in an award he had become a partner in the law firm of Norton Rose Fulbright.41 Thus, in July 2014, almost a decade after the arbitration had begun, the tribunal issued its Final Award (interim awards on jurisdiction and admissibility having been issued in November 2009), awarding Claimants damages in the record-breaking sum of approximately US$50 billion. As is well known, however, the saga did not end there. In January 2015, Russia filed an application with the District Court in The Hague to have the tribunal’s interim and final awards set aside42—an application which was granted by the Court in April 2016.43 That decision is now on appeal to the Hague Court of Appeal, which has yet to hand down its decision. Although the District Court set aside the awards on the grounds that the ECT had not been ratified by the Russian Parliament, it also heard arguments from Russia that Mr Valasek’s role as Assistant to the Tribunal justified annulment of the award. In essence, so Russia alleged, Mr Valesek had played an improper role in the decision-making process—becoming, in effect, the ‘fourth arbitrator’. In consequence, Russia argued, the arbitrators had not personally fulfilled their mandate44 and the tribunal had been irregularly composed,45 in breach of the Dutch Code of Civil Procedure.46 In particular, Russia alleged that (i) Mr Valasek’s appointment was announced by the tribunal as a ‘fait accompli’,47 to which the parties had not given their explicit permission; (ii) Mr Valasek had spent far more time on the awards, especially during the merits phase, than the arbitrators themselves;48 and (iii) these hours were inexplicable unless the assistant had participated in the decision-making process, all the more so since two staff members of the PCA had themselves spent over 5200 hours on the administration of the arbitration proceedings.49 Russia even hired a forensic linguist, who determined that it was allegedly ‘95% certain’ that the Secretary wrote substantial and substantive parts of the awards. Russia claimed that it was ‘extremely likely’ that Mr Valasek wrote 79 per cent of the preliminary objections section of the awards (section IX), 65 per cent of the liability section (section X), and 71 per cent of the damages section (section XII).50 In consequence of the above, Russia concluded, Mr Valasek must be ‘presumed to have actively participated in the decision-making process, resulting in the Tribunal effectively consisting of four persons’.51 Ultimately, having decided that there were other grounds justifying the set-aside of the awards, the District Court did not address the question of the role played by the tribunal’s assistant. 2.2 Guyana v Venezuela But while the Yukos cases point towards the importance of transparency in the role of arbitral secretaries, the long-running boundary dispute between Guyana and Venezuela exemplifies the importance of its limits. Because while transparency can be a benefit to the arbitral process, an excess of transparency can itself also contribute to undermining its legitimacy. To see this, let us turn back more than a century, to the year 1897, and to a stretch of land between what was then British Guiana—now Guyana—and Venezuela. At the time, this stretch of land was disputed territory between Britain and Venezuela. In 1897, as a result of the US pressure brought to bear on the British under the auspices of the Monroe Doctrine,52 Britain and Venezuela agreed to constitute a five-member arbitration tribunal to resolve their dispute. The tribunal comprised two Americans, the then Chief Justice of the US Supreme Court and an associate Justice, who were appointed on behalf of Venezuela; two senior English judges, the then Lord Chief Justice and a Justice of Appeal, appointed by the British; and by unanimous selection of those four, a distinguished Russian jurist as the fifth member, Fyodor de Martens. Venezuela’s senior counsel was former US President Benjamin Harrison; and playing a role as a junior member of his counsel team, was one Severo Mallet-Prevost.53 In 1899, after 54 sessions of oral argument that took place in Paris, the tribunal handed down a unanimous decision. In general, that decision favoured British Guiana and, of course, its successor Guyana, but it handed to Venezuela the strategic territory around the mouth of the Orinoco River. Despite some protestations against the outcome, both parties broadly respected the decision for well over half a century.54 That was until the mid-1940s, when the posthumous publication of a letter written by Mr Mallet-Prevost only after the death of all five members of the arbitral tribunal, threw open the now long-settled dispute.55 To be clear, given the topic of this article, Mr Mallet-Prevost had not been secretary to the arbitral tribunal; he was junior counsel for Venezuela. However, his purported revelations pertained to disclosure of the type of information about internal tribunal deliberations to which arbitral secretaries typically are privy.56 In his posthumous letter, Mr Mallet-Prevost purported to recount an ex parte conversation that he had had with the two US judges on the Tribunal. Mr Mallet-Prevost disclosed their alleged belief that a political deal had been done between the English and Russian governments; a political deal that, supposedly, led the two English judges and the Russian chairman behind the scenes to reach a common position that allegedly was entirely unrelated to the legal and factual merits of the parties’ respective claims. On this improper political basis—so Mr Mallet-Prevost alleged—the British and Russian arbitrators presented their US colleagues with an ultimatum: agree to a decision granting Venezuela only 5000 square miles of territory; or dissent, and have the British and Russian arbitrators impose, by a majority, a ruling even more favourable to the UK that would include the mouth of the Orinoco river. Mr Mallet-Prevost’s allegations were unsupported, and no explanation was given for the half century that had elapsed without complaint. Precisely why Mr Mallet-Prevost was motivated to write his letter will now likely remain a mystery.57 What we do know, is that as a result of that posthumous missive, a century later Guyana and Venezuela remain in dispute as to who has sovereignty over the territory now known as Guayana Esequiba,58 a territory that is now believed to be rich in hydrocarbons. 3. LAYING THE FOURTH ARBITRATOR TO REST: LESSONS FOR CONTEMPORARY ARBITRAL PRACTICE It is clearly undesirable that, as in Yukos, a dispute as to the role played by an arbitral secretary should come to occupy so much time and cost, and to come so close to endangering the hard-fought justice of a decade-long arbitral process. That does not necessarily mean that arbitral secretaries should not play any role in assisting in the substantive work of the tribunal. Under the direction of a conscientious tribunal that is no more improper in international arbitration than it for a Law Clerk to assist the US Supreme Court, or a Referendaire to assist the Court of Justice of the European Union.59 In short, while an arbitrator should restrict a secretary’s role in the drafting of awards, there remains a clear distinction between responsible delegation and irresponsible derogation—one that a conscientious arbitrator, concerned to remain master of their procedure and fulfil their mandate responsibly, should have little difficulty in applying. Instead, the lesson we might derive from Yukos, is that those interested in safeguarding the efficacy of the arbitral process have a compelling interest in ensuring that the work of the secretary is clearly agreed by the parties, and transparent to the parties, throughout the process.60 For any lack of transparency, real or perceived, can be used to place in jeopardy the outcome of a process that the institution of secretaries is designed to facilitate. The ongoing divergence in practice has prompted some to call for greater uniformity of regulation, suggesting that the discrepancy between the restrictions placed by institutions on the role of arbitral secretaries ‘contributes to the uncertainty regarding the proper role of the tribunal secretary, which in turn might negatively affect the perceived legitimacy of the arbitral process and the resulting award’.61 Provided, however, that there is clarity and transparency as to the role of the arbitral secretary, there seems to be no principled reason why there should not be a multiplicity of practice, allowing arbitral secretaries to play different roles depending on the institutional rules under the which the arbitration is conducted, the preferred practice of the tribunal members and, above all, the informed consent of the parties to the arbitration.62 Not only would a uniform standard be unlikely to satisfy all parties,63 but, absent such transparency, it may be difficult with regulation alone to ensure that the parties’ expectations, and the tribunal’s practice, are adequately aligned. But while cultivating transparency in the use of arbitral secretaries, we must also remain conscious of the limits of the role, and the limits of secretarial transparency, so that a door is not opened inadvertently and improperly onto le secret du délibéré. Such a state of affairs already exists in other fora, notably the US Supreme Court, where there is an extensive literature that has been written by US Law Clerks to the US Supreme Court disclosing the manner in which decisions are reached by judges in deliberation64—and, as we have seen, many procedural rules specifically provide that arbitral secretaries may attend deliberations. In this regard, it bears repeating that Mr Mallet-Prevost was not an arbitral secretary. But, according to his claims, he found himself in exactly the same position as many secretaries: with access to, and intimate knowledge of, the inner working of an arbitral tribunal’s deliberations. Mr Mallet-Prevost’s clams, regardless of their veracity, illustrate what mischief that knowledge can lead to, if not handled with appropriate responsibility and discretion. In doing so, they remind us that while greater transparency may reinforce the legitimacy of the arbitral process, we must explore with care how the implications of such transparency are translated into arbitral practice. Footnotes 1 Constantine Partasides QC, ‘The Fourth Arbitrator? The Role of Secretaries to Tribunals in International Arbitration’ (2002) 18 Arb. Int’l 147, 163. 2 ibid 147–48. 3 This article uses the term ‘arbitral secretary’ but treats that term as being synonymous with other common titles, notably ‘tribunal secretary’ and ‘administrative secretary’. 4 See Young ICCA Guide on Arbitral Secretaries, The ICCA Reports No 1, Annex B, 67, where a clear majority (58.9%) of respondents to the 2012 ICCA Survey considered that there is a need to ‘change today’s practice with regard to secretaries’. See also P v Q [2017] EWHC 194 (Comm) at 68, where Popplewell J noted the ‘considerable and understandable anxiety in the international arbitration community that the use of arbitral secretaries risks them becoming the “fourth arbitrators”’. 5 Anthony Depalma, ‘Nafta's Powerful Little Secret; Obscure Tribunals Settle Disputes, but Go Too Far, Critics Say’ New York Times (New York, 11 March 2001) <https://tinyurl.com/m4qyzj5> accessed 5 January 2018. 6 See, eg, M Waibel and others (eds), The Backlash against Investment Arbitration (Kluwer 2010). 7 By Bolivia (2007), Ecuador (2009), and Venezuela (2012). 8 By, among others, South Africa, Indonesia, and Poland. 9 The Mauritius Convention on Transparency entered into force on 18 October 2017, following its ratification by three signatory states, Mauritius, Canada, and Switzerland. 10 UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, art 1(4). 11 ‘LCIA Releases Costs and Duration Data’, LCIA (3 November 2015) <http://www.lcia.org/News/lcia-releases-costs-and-duration-data.aspx> accessed 5 January 2018. 12 Art 41 of the VIAC Rules 2013 provides that, unless the Parties’ object, the VIAC may publish anonymized summaries or extracts of the award. 13 See the VIAC website <http://www.viac.eu/en/component/content/article/79-viac/257-selected-arbitral-awards-viac-read-more-e> accessed 5 January 2018. 14 Art 11(4) of the 2017 ICC Rules provides that ‘[t]he decisions of the Court as to the appointment, confirmation, challenge or replacement of an arbitrator shall be final’, omitting the language from the 2012 ICC Rules that ‘the reasons for such decisions shall not be communicated’. 15 See, eg, Victoria Pernt, ‘How Much (More) Transparency Does Commercial Arbitration Really Need?’ Kluwer Arbitration Blog (Kluwer Law International, 4 March 2017). 16 Constantine Partasides QC and Simon Maynard, ‘Raising the Curtain on English Arbitration’ (2017) 33 Arb Int’l 197. 17 ‘Young ICCA Guide on Arbitral Secretaries’ The ICCA Reports No 1, 11, art 3(1). The Guide describes its purpose as to ‘advance a more transparent and robust approach to the role of secretaries in arbitration’. 18 Partasides (n 1) 147, 159 (‘[a]ny such statements are unlikely to enlarge upon the arbitrator’s existing duty not to delegate’ and that ‘[f]raming any safeguards as a code for secretaries as opposed to an obligation on the arbitrator would, moreover, have the inadvertent effect of aggrandizing the secretary by suggesting a role that is independent of that of the arbitrator’ and that ‘any such code would be impossible to police’). See also Toby Landau QC’s warning against ‘legislitis’ (‘an involuntary reaction where ‘if something moves, codify it’’, with ‘people were suffering from “the urge to set down principles encapsulating otherwise self-evident propositions”’ <https://www.ibanet.org/Article/NewDetail.aspx?ArticleUid=16A5FA49-45DC-402E-BD79-6908FF8A0216> accessed 5 January 2018. 19 Young ICCA Guide on Arbitral Secretaries, The ICCA Reports No 1, 11, art 3(1). 20 ibid. 21 ibid arts 3(2)(e)-(j). 22 ‘Guidelines on the Use of a Secretary to the Arbitral Tribunal’, Hong Kong International Arbitration Centre, 1 June 2014, para 1.1. 23 ibid para 3.3. These include transmitting documents and communications on behalf of the tribunal, organizing and maintaining the tribunal’s files, and coordinating logistics for hearings and meetings. 24 ibid para 3.4. 25 ibid para 2.2. 26 ‘Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration’, International Chamber of Commerce, October 2017. 27 ibid s XVII, ¶ 150. The ICC Note includes attending hearing and conducting legal research within a list of ‘organisational and administrative tasks’. 28 ibid s XVII, ¶¶ 151, 153. 29 ibid ¶ 147. 30 ibid ¶ 147. 31 ‘LCIA Notes for Arbitrators’, LCIA, s 8.2. 32 ibid. 33 Arbitration Institute of the Stockholm Chamber of Commerce, Arbitration Rules 2017, art 24(2). 34 ‘Arbitrator’s Guidelines’, SCC, January 2017. 35 ‘Singapore International Arbitration Centre, Practice Note PN – 01/15 (2 February 2015), Administered Cases, On the Appointment of Administrative Secretaries’, SIAC. 36 ‘UNCITRAL, Notes on Organizing Arbitral Proceedings’, UNCITRAL, March 2012, art 1. 37 ibid art 27. 38 Hulley Enterprises Limited (Cyprus) v The Russian Federation, UNCITRAL, PCA Case No AA 226; Yukos Universal Limited (Isle of Man) v The Russian Federation, UNCITRAL, PCA Case No AA 227; Veteran Petroleum Limited (Cyprus) v The Russian Federation, UNCITRAL, PCA Case No AA 228. 39 This is the terminology employed in both the Interim Award on Jurisdiction and Admissibility of 30 November 2008 and the Final Award of 18 July 2014. 40 Writ of Summon of the Russian Federation, 2014, para 490. 41 Russia in fact argued that the advancement in Mr Valasek’s career between 2004 and 2014, from an associate at Yves Fortier’s law firm to a partner at Norton Rose, should have mitigated in favour of him standing down as the arbitral secretary, noting that there was authority to support the proposition that an assistant ought to be replaced if he becomes a well-known arbitrator in his own right. ibid para 505. 42 Russia applied for joinder of the three cases pursuant to art 222 of the Dutch Code of Civil Procedure (DCCP) and, accordingly, the District Court considered the three cases together. 43 Judgment of The Hague District Court, Chamber for Commercial Affairs, C/09/477160/HA ZA 15-1, C/09/477162/HA ZA 15-2 and C/09/481619/HA ZA 15-112, 20 April 2016. 44 DCCP, art 1065(1)(c). 45 DCCP, art 1065(1)(b). 46 Writ of Summon of the Russian Federation, 2014 <https://www.italaw.com/sites/default/files/case-documents/italaw4158_0.pdf>. Russia based its argument on two grounds, namely that (i) the arbitrators had not personally fulfilled their mandate (DCCP art 1065(1)(c)); and (ii) the tribunal was irregularly composed (DCCP art 1065(1)(b). 47 Writ of Summon of the Russian Federation, 2014, ¶ 48. 48 ibid ¶ 497. Russia alleged that, based on the amount that he had billed (EUR 970,562.50) it was apparent that he had spent 3006.2 hours in total working on the arbitration, and had spent 2625 hours on the merits phase. In comparison, Yves Fortier had billed EUR 1,732,937 for the entire arbitration, and spent 1592 hours on the merits phase. Charles Poncet and Stephen Schwebel had spent 1540 hours and 1852 hours, respectively, on the merits phase. In effect, therefore, Mr Valasek had spent 65% more time on the merits than the Chairman. 49 The very fact that the position of Mr Valasek’s name had changed on the cover page of the Final Awards (appearing before the two PCA staff members, Judith Levine and Brooks Daly) as compared with the position on the cover page of the Interim Awards (at the bottom, after Judith Levine and Brooks Daly) showed, Russia suggested, ‘a subtle change that suggests the Tribunal had silently elevated his status above that of the secretary and assistant secretary by the time of its deliberations on the Final Awards’; see ibid ¶ 503. Further, the fact that the Secretariat refused to disclose any further details about the role played by Mr Valasek when requested to do so by Russia, citing the confidentiality of the ‘Tribunal’s deliberations’, was, so Russia argued, another indicator that Mr Valasek had played an excessive role in the decision-making; see ibid ¶ 500. 50 Alison Ross, ‘Valasek wrote Yukos awards, says linguistic expert’ Global Arbitration Review, 20 October 2015 <http://globalarbitrationreview.com/article/1034846/valasek-wrote-yukos-awards-says-linguistics-expert> accessed 6 January 2018. 51 Writ of Summon of the Russian Federation, 2014, ¶ 511(a) (emphasis added). 52 The Monroe Doctrine was a US foreign policy of opposing European colonialism in the Americas. 53 If that name sounds familiar, it may because Mr Mallet-Prevost went on to become one of the founding partners of the law firm Curtis, Mallet-Prevost, Colt & Mosle. 54 During the years 1901–5 the boundary as defined in the Arbitral Award was demarcated by a British-Venezuelan Mixed Boundary Commission. On 10 January 1905, the Boundary Commissioners signed a Joint Report signifying the final delineation of the boundary as demarcated by them and as set out in a map of the entire border. The report with the boundary map was accepted by both governments, and was outwardly accepted by the parties and by the international community as a whole. See Orlando Jesus Fernandez y Gomez, ‘The Guyana-Venezuela Border Dispute: An Analysis of the Reasons Behind Venezuela’s Continuing Demands for Abrogation of the 1899 Anglo-Venezuelan Arbitral Treaty’, A Thesis Presented to the Graduate School of the University of Florida in Partial Fulfilment of the Requirement of the Degree of Master of Arts, University of Florida, 1992. 55 The text of letter is reproduced at Orlando Jesus Fernandez Gomez, ‘The Guyana-Venezuela Border Dispute’, 19–21. 56 Indeed, virtually all major arbitral rules allow (explicitly or implicitly) for the possibility that an arbitral secretary will attend the tribunal’s deliberations. 57 One month before the Mallet-Prevost letter was written, Mr Mallet-Prevost had been decorated by the Venezuelan Government with the ‘Order of the Liberator’, Venezuela’s highest civilian honour. 58 Indeed, in January 2018, the Secretary-General announced his intention to exercise the power conferred upon him by Guyana and Venezuela to refer the dispute to the International Court of Justice; see <https://www.un.org/sg/en/content/sg/statement/2018-01-30/statement-attributable-spokesman-secretary-general-border> accessed 31 January 2018. 59 Partasides (n 1) 147, 156–57. 60 The LCIA’s revised Notes for Arbitrators, which provide that the precise tasks carried out by the secretary to any given tribunal, together with the secretary’s rate of remuneration, must be agreed with the parties, seem to be based on this very approach. 61 Michael Polkinghorne and Charles B Rosenberg, ‘The Role of the Tribunal Secretary in International Arbitration: A Call for a Uniform Standard’, International Bar Association, 5 March 2015 <https://www.ibanet.org/Article/NewDetail.aspx?ArticleUid=987d1cfc-3bc2-48d3-959e-e18d7935f542#_ftn62> accessed 6 January 2018. 62 A clear majority (61.9%) of respondents to the 2012 ICCA survey consider that the ‘tasks and duties’ of the secretary should be negotiated with the parties, second only to the secretaries’ ‘remuneration and expenses’ (79.4%); see Young ICCA Guide on Arbitral Secretaries, The ICCA Reports No 1, Annex B, p 59. 63 For example, in the 2013 ICCA Survey, respondents were divided 49.5% to 50% against permitting arbitral secretaries to ‘review and summarise the parties’ submissions for the Arbitral Tribunal’ and 47.3% to 52.7% against secretaries ‘identify[ing] key documents/pieces of evidence’; see Young ICCA Guide on Arbitral Secretaries, The ICCA Reports No 1, Annex C, 76–77. 64 Partasides (n 1) 147, 149. © The Author(s) 2018. Published by Oxford University Press on behalf of the London Court of International Arbitration. All rights reserved. For permissions, please email: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/about_us/legal/notices) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Arbitration International Oxford University Press

Laying the fourth arbitrator to rest: re-evaluating the regulation of arbitral secretaries

Arbitration International , Volume Advance Article (2) – May 25, 2018

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Abstract

Abstract Despite significant efforts to improve the transparency of international arbitration, the spectre of arbitral secretaries as the ‘fourth arbitrator’ still haunts the arbitral process. Efforts to clarify and codify the role of arbitral secretaries have failed to assuage the perception that, at least on occasion, arbitral secretaries may exceed the appropriate limits of their responsibilities. This can only be harmful to the legitimacy of the arbitral process. Against the backdrop of the rise of transparency in international arbitration, this article sets out to re-evaluate the role of arbitral secretaries in modern international arbitration. Having first considered the efforts that have already been made to address the perceived problem of the fourth arbitrator, the article draws on two cases studies—the well-known Yukos cases and the lesser-known, long-running boundary dispute between Guyana and Venezuela—to highlight both the importance of transparency as it applies to arbitral secretaries, and the importance of its limits. In the light of those cases, the article proposes certain measures that may, finally, allow us to lay the fourth arbitrator to rest. Sixteen years ago, in this very journal, an author raised the spectre of arbitral secretaries as the ‘fourth arbitrator’.1 In doing so, the author sought not to describe ‘a state of affairs that is presently believed to exist’ but to address a growing concern at what was then ‘perceived to be the excessive role of some of these assistants’.2 Since then, there have been significant moves towards greater transparency of the arbitral process as a whole, and, against that backdrop, towards greater codification of the role of arbitral secretaries3 in particular. Yet despite these developments, the perception that some arbitral secretaries may be overstepping the bounds of their remit persists.4 That it does so, the best part of two decades after the term ‘fourth arbitrator’ was first coined, can only be detrimental to the legitimacy of the arbitral process. This article therefore sets out to re-evaluate the role of arbitral secretaries in modern international arbitration. Against the background of the rise in transparency in international arbitration, it first considers what efforts have been made in the intervening years to address the perceived problem of the fourth arbitrator. In the light of contemporary practice, the article then considers two cases—the well-known Yukos cases and the lesser-known, long-running boundary dispute between Guyana and Venezuela—which illustrate both the importance of transparency as it applies to arbitral secretaries, and the importance of its limits. Drawing on those cases, the final section then suggests certain measures that may, finally, enable us to lay the fourth arbitrator to rest. 1. THE RISE OF TRANSPARENCY IN INTERNATIONAL ARBITRATION The present preoccupation with transparency in international arbitration has its origins in concerns as to the accountability of investment treaty arbitration. As early as 2001, an article in the New York Times said of tribunals established under the North American Free Trade Agreement:5 Their meetings are secret. Their members are generally unknown. The decisions they reach need not be fully disclosed. Yet the way a small group of international tribunals handle disputes between investors and foreign governments has led to national laws being revoked, justice systems questioned and environmental regulations challenged. This perceived lack of accountability, together with misgivings as to whether expansive interpretations of investment protection standards have begun to sacrifice sovereign discretion in favour of investor protection, has, some have argued, given rise to a ‘backlash’ against investment treaty arbitration.6 This has been manifest in denunciations of the ICSID Convention,7 cancellation (or the threat of cancellation) of bilateral investment treaties,8 and large-scale public protests against proposed multilateral investment treaties, notably the Transatlantic Trade and Investment Partnership. This increasingly hostile political climate has engendered a number of developments to improve the transparency of the international investment regime, amongst them the 2014 UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, the 2015 Mauritius Convention on Transparency,9 and the UNCITRAL Transparency Registry. The broad thrust of these initiatives has been to begin to address the ‘public interest in transparency in treaty based investor-State arbitration’,10 responding to a key criticism levelled against investor-State arbitration since its inception, that investment tribunals frequently decide matters of public importance behind closed doors. But although investor-State arbitration has been the focal point for the push for greater transparency in international arbitration, recent years have also witnessed a number of initiatives, often led by arbitral institutions, aimed at increasing the transparency of international arbitration more broadly. In 2015, the London Court of International Arbitration (LCIA) became the first leading arbitral institution to publish figures for the costs and duration of its cases. As the LCIA noted, users of international arbitration had ‘expressed a strong interest in institutions publishing such data’, which, the LCIA concluded, would ‘contribute to informed decision-making by providing transparency in relation to costs and duration’.11 In the same year, the Vienna International Arbitral Centre (VIAC) took the step of publishing anonymized summaries or extracts of awards.12 Explaining its decision, the VIAC observed that it was ‘time to draw back the curtains and thereby provide greater insight into the work of the institution as well as that of arbitral tribunals appointed under its auspices’.13 More recently, the International Chamber of Commerce (ICC) has begun publishing on its website the names and nationalities of all arbitrators sitting in ICC cases. The listing also identifies whether the appointment was made by the ICC Court or by the parties, the identity of the tribunal chairperson and any changes in the tribunal’s composition. Further, the amended Article 11(4) of the 2017 ICC Rules now permits the ICC Court to provide reasons for the appointment, challenge, or replacement of an arbitrator, something which was previously expressly prohibited.14 Notwithstanding such initiatives—which, in themselves, remain piecemeal—misgivings about any further intrusion of transparency into the sphere of commercial arbitration appear to remain commonplace.15 Such sentiments are easy to understand. Perhaps now more than ever it is tempting to believe that confidentiality has become even more of a virtue of the arbitral process. The less publicity our process attracts—so this argument might go—the better it will be able to perform its justice function with professional quality and efficiency. On the other hand, as this author has argued elsewhere,16 such sentiments may underestimate the hidden costs of confidentiality. For while international arbitration is, above all, a means of resolving particular commercial disputes in the context of particular commercial relationships that rarely will be helped by unnecessary publicity, the paucity of information about what takes place in arbitrations can make the process less predictable for all participants, which, in turn, risks undermining the legitimacy of a process that those same users depend upon. The tension between these positions has been evident in efforts to regulate the function of arbitral secretaries. Against the backdrop of the move towards greater transparency of the arbitral process as a whole, the last sixteen years (since the spectre of the fourth arbitrator was first raised) have witnessed numerous attempts to codify the role of the arbitral secretary, underlying which is the presumption that more transparency is indeed required in respect at least of that facet of arbitral procedure.17 And while some commentators have raised legitimate reservations about such efforts at codification,18 the available evidence suggests that these attempts are responsive to a desire among users and practitioners for greater clarity in respect of the role of arbitral secretaries. 2. ATTEMPTS TO CODIFY THE ROLE OF ARBITRAL SECRETARIES There appears to be relatively widespread agreement that ‘[w]ith appropriate direction and supervision by the arbitral tribunal, an arbitral secretary’s role may legitimately go beyond the purely administrative’.19 This is the conclusion of perhaps the most thoroughgoing study of arbitral secretaries, the Young International Council for Commercial Arbitration (ICCA) Guide on Arbitral Secretaries, which, drawing on two surveys of international arbitration practitioners, users and providers, seeks to establish a comprehensive list of best practice principles for the appointment and use of arbitral secretaries.20 Beyond that, however, there is significant divergence of practice. The ICCA Guide elaborates that an arbitral secretary’s tasks may include, among other things, ‘[r]esearching questions of law; [r]esearching discrete questions relating to factual evidence and witness testimony; [d]rafting procedural orders and similar documents; [r]eviewing the parties’ submissions and evidence, and drafting factual chronologies and memoranda summarizing the parties’ submissions and evidence; [a]ttending the arbitral tribunal’s deliberations; and [d]rafting appropriate parts of the award’.21 At present, this seems to represent the high watermark in terms of leeway afforded to arbitral secretaries, from which most arbitral institutions have retreated in at least some respects. Most comparable are the Hong Kong International Arbitration Centre's (HKIAC) June 2014 ‘Guidelines on the Use of a Secretary to the Arbitral Tribunal’, which may be adopted by parties to arbitrations administered by the HKIAC under the HKIAC Rules or the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules.22 The Guidelines allow a secretary to perform ‘organisational and administrative tasks’23 and, unless the parties agree or the tribunal directs otherwise, also to conduct legal research; collect case law or published commentaries on legal issues defined by the tribunal; research discrete questions relating to factual evidence and witness testimony; draft memoranda summarizing the parties’ submissions and evidence; attend the tribunal’s deliberations; and prepare drafts of non-substantive parts of the tribunal’s orders, decisions, and awards (such as procedural histories and chronologies of events).24 The Guidelines also require a proposed secretary to sign a declaration of availability, impartiality, and independence prior to his or her appointment.25 Somewhat more restrictive, is the approach of the ICC. In October 2017, the Secretariat of the ICC International Court of Arbitration published a Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration,26 which sets out guidance on the appointment, duties, and remuneration of an arbitral secretary. Like the HKIAC, the ICC also envisages that secretaries’ duties may extend beyond ‘organisational and administrative tasks’ to include attending deliberations and performing legal research.27 However, the Note also strictly limits the role of the arbitral secretary, inasmuch as it requires that ‘[u]nder no circumstances may the Arbitral Tribunal delegate decision-making functions to an Administrative Secretary’ and that a ‘request by an Arbitral Tribunal to an Administrative Secretary to prepare written notes or memoranda shall in no circumstances release the Arbitral Tribunal from its duty personally to review the file and/or to draft any decision of the Arbitral Tribunal’.28 The 2017 Note also provides that before an ICC tribunal appoints a secretary it must inform the parties of its proposal to do so.29 The tribunal must then submit to the parties the proposed secretary’s curriculum vitae and a declaration of independence and impartiality, which is ‘an undertaking on the part of the Administrative Secretary to act in accordance with the present Note and an undertaking on the part of the arbitral tribunal to ensure that this obligation on the part of the Administrative Secretary shall be met’.30 The LCIA’s Notes for Arbitrators envisages a comparable scope of tasks, including that an arbitral secretary may attend hearings, meetings, and deliberations.31 However, following changes to its Notes for Arbitrators in October 2017, the LCIA now provides that the precise tasks carried out by the secretary to any given tribunal, together with the secretary’s rate of remuneration, must be agreed with the parties.32 There also remain a number of institutions that offer more limited guidance as to the appropriate scope of an arbitral secretary’s role. The Arbitration Institute of the Stockholm Chamber of Commerce (SCC) Arbitration Rules 2017 compel the tribunal to ‘consult’ the parties regarding the task of the arbitral secretary and state that the tribunal ‘may not delegate any decision-making authority to the administrative secretary’.33 The SCC’s 2017 Arbitrator’s Guidelines further provide that, subject to any agreement of the parties to the contrary, ‘the administrative secretary’s duties shall be limited to organizational, clerical and administrative functions’, but does not include any guidance on what that might entail.34 The Singapore International Arbitration Centre (SIAC) is even more taciturn on the subject. Its 2015 Practice Note on Appointment of Administrative Secretaries provides guidance on when a secretary may be appointed and the basis on which a secretary can be remunerated; however, other than providing that a secretary may only be appointed with the consent of all the Parties, it does not cover the scope of a secretary’s duties in SIAC arbitrations, leaving this instead to be agreed between the parties.35 As to the UNCITRAL Notes on Organizing Arbitral Proceedings, published in 1996 to ‘assist arbitration practitioners by listing and briefly describing questions on which appropriately timed decisions on organising arbitral proceedings may be useful’,36 these are limited to describing the state of practice at that time. They note that the use of arbitral secretaries for ‘purely organisational’ tasks is ‘usually not controversial’ but that ‘[d]ifferences in views’ may arise if the secretary’s tasks include matters such as ‘legal research’, ‘preparing summaries from case law and publications’ or ‘preparing drafts of procedural decisions or drafts of certain parts of the award’ and that ‘[v]iews or expectations may differ especially where a task of the secretary is similar to professional functions of the arbitrators’.37 2.1 The Yukos cases Precisely such a difference in views and expectations was at the heart of the now infamous dispute surrounding the role of the arbitral secretary in the Yukos cases, themselves heard under the UNCITRAL Rules, which may serve to illustrate the dangers of a perception of insufficient transparency in the role of the arbitral secretary. This story began in November 2004, when three shareholders of the now defunct Yukos Oil Company—Hulley Enterprises Limited, Yukos Universal Limited, and Veteran Petroleum Limited—commenced three separate but parallel arbitrations administered by the PCA under the UNCITRAL Arbitration Rules against the Russian Federation,38 based on allegations that Russian had employed a combination of bad faith tax assessments and criminal proceedings to bring about the effective dispossession and destruction of Yukos’s assets. The three parallel arbitrations were conducted in a single set of proceedings. At the first organizational hearing on 31 October 2005, the arbitral tribunal appointed an ‘Assistant to the Tribunal’,39 apparently to provide administrative assistance and exercise liaison duties.40 At the time of his appointment, the individual in question—Mr Martin Valasek—was a relatively junior lawyer; however, arbitration not always being a quick process, by the time the arbitration resulted in an award he had become a partner in the law firm of Norton Rose Fulbright.41 Thus, in July 2014, almost a decade after the arbitration had begun, the tribunal issued its Final Award (interim awards on jurisdiction and admissibility having been issued in November 2009), awarding Claimants damages in the record-breaking sum of approximately US$50 billion. As is well known, however, the saga did not end there. In January 2015, Russia filed an application with the District Court in The Hague to have the tribunal’s interim and final awards set aside42—an application which was granted by the Court in April 2016.43 That decision is now on appeal to the Hague Court of Appeal, which has yet to hand down its decision. Although the District Court set aside the awards on the grounds that the ECT had not been ratified by the Russian Parliament, it also heard arguments from Russia that Mr Valasek’s role as Assistant to the Tribunal justified annulment of the award. In essence, so Russia alleged, Mr Valesek had played an improper role in the decision-making process—becoming, in effect, the ‘fourth arbitrator’. In consequence, Russia argued, the arbitrators had not personally fulfilled their mandate44 and the tribunal had been irregularly composed,45 in breach of the Dutch Code of Civil Procedure.46 In particular, Russia alleged that (i) Mr Valasek’s appointment was announced by the tribunal as a ‘fait accompli’,47 to which the parties had not given their explicit permission; (ii) Mr Valasek had spent far more time on the awards, especially during the merits phase, than the arbitrators themselves;48 and (iii) these hours were inexplicable unless the assistant had participated in the decision-making process, all the more so since two staff members of the PCA had themselves spent over 5200 hours on the administration of the arbitration proceedings.49 Russia even hired a forensic linguist, who determined that it was allegedly ‘95% certain’ that the Secretary wrote substantial and substantive parts of the awards. Russia claimed that it was ‘extremely likely’ that Mr Valasek wrote 79 per cent of the preliminary objections section of the awards (section IX), 65 per cent of the liability section (section X), and 71 per cent of the damages section (section XII).50 In consequence of the above, Russia concluded, Mr Valasek must be ‘presumed to have actively participated in the decision-making process, resulting in the Tribunal effectively consisting of four persons’.51 Ultimately, having decided that there were other grounds justifying the set-aside of the awards, the District Court did not address the question of the role played by the tribunal’s assistant. 2.2 Guyana v Venezuela But while the Yukos cases point towards the importance of transparency in the role of arbitral secretaries, the long-running boundary dispute between Guyana and Venezuela exemplifies the importance of its limits. Because while transparency can be a benefit to the arbitral process, an excess of transparency can itself also contribute to undermining its legitimacy. To see this, let us turn back more than a century, to the year 1897, and to a stretch of land between what was then British Guiana—now Guyana—and Venezuela. At the time, this stretch of land was disputed territory between Britain and Venezuela. In 1897, as a result of the US pressure brought to bear on the British under the auspices of the Monroe Doctrine,52 Britain and Venezuela agreed to constitute a five-member arbitration tribunal to resolve their dispute. The tribunal comprised two Americans, the then Chief Justice of the US Supreme Court and an associate Justice, who were appointed on behalf of Venezuela; two senior English judges, the then Lord Chief Justice and a Justice of Appeal, appointed by the British; and by unanimous selection of those four, a distinguished Russian jurist as the fifth member, Fyodor de Martens. Venezuela’s senior counsel was former US President Benjamin Harrison; and playing a role as a junior member of his counsel team, was one Severo Mallet-Prevost.53 In 1899, after 54 sessions of oral argument that took place in Paris, the tribunal handed down a unanimous decision. In general, that decision favoured British Guiana and, of course, its successor Guyana, but it handed to Venezuela the strategic territory around the mouth of the Orinoco River. Despite some protestations against the outcome, both parties broadly respected the decision for well over half a century.54 That was until the mid-1940s, when the posthumous publication of a letter written by Mr Mallet-Prevost only after the death of all five members of the arbitral tribunal, threw open the now long-settled dispute.55 To be clear, given the topic of this article, Mr Mallet-Prevost had not been secretary to the arbitral tribunal; he was junior counsel for Venezuela. However, his purported revelations pertained to disclosure of the type of information about internal tribunal deliberations to which arbitral secretaries typically are privy.56 In his posthumous letter, Mr Mallet-Prevost purported to recount an ex parte conversation that he had had with the two US judges on the Tribunal. Mr Mallet-Prevost disclosed their alleged belief that a political deal had been done between the English and Russian governments; a political deal that, supposedly, led the two English judges and the Russian chairman behind the scenes to reach a common position that allegedly was entirely unrelated to the legal and factual merits of the parties’ respective claims. On this improper political basis—so Mr Mallet-Prevost alleged—the British and Russian arbitrators presented their US colleagues with an ultimatum: agree to a decision granting Venezuela only 5000 square miles of territory; or dissent, and have the British and Russian arbitrators impose, by a majority, a ruling even more favourable to the UK that would include the mouth of the Orinoco river. Mr Mallet-Prevost’s allegations were unsupported, and no explanation was given for the half century that had elapsed without complaint. Precisely why Mr Mallet-Prevost was motivated to write his letter will now likely remain a mystery.57 What we do know, is that as a result of that posthumous missive, a century later Guyana and Venezuela remain in dispute as to who has sovereignty over the territory now known as Guayana Esequiba,58 a territory that is now believed to be rich in hydrocarbons. 3. LAYING THE FOURTH ARBITRATOR TO REST: LESSONS FOR CONTEMPORARY ARBITRAL PRACTICE It is clearly undesirable that, as in Yukos, a dispute as to the role played by an arbitral secretary should come to occupy so much time and cost, and to come so close to endangering the hard-fought justice of a decade-long arbitral process. That does not necessarily mean that arbitral secretaries should not play any role in assisting in the substantive work of the tribunal. Under the direction of a conscientious tribunal that is no more improper in international arbitration than it for a Law Clerk to assist the US Supreme Court, or a Referendaire to assist the Court of Justice of the European Union.59 In short, while an arbitrator should restrict a secretary’s role in the drafting of awards, there remains a clear distinction between responsible delegation and irresponsible derogation—one that a conscientious arbitrator, concerned to remain master of their procedure and fulfil their mandate responsibly, should have little difficulty in applying. Instead, the lesson we might derive from Yukos, is that those interested in safeguarding the efficacy of the arbitral process have a compelling interest in ensuring that the work of the secretary is clearly agreed by the parties, and transparent to the parties, throughout the process.60 For any lack of transparency, real or perceived, can be used to place in jeopardy the outcome of a process that the institution of secretaries is designed to facilitate. The ongoing divergence in practice has prompted some to call for greater uniformity of regulation, suggesting that the discrepancy between the restrictions placed by institutions on the role of arbitral secretaries ‘contributes to the uncertainty regarding the proper role of the tribunal secretary, which in turn might negatively affect the perceived legitimacy of the arbitral process and the resulting award’.61 Provided, however, that there is clarity and transparency as to the role of the arbitral secretary, there seems to be no principled reason why there should not be a multiplicity of practice, allowing arbitral secretaries to play different roles depending on the institutional rules under the which the arbitration is conducted, the preferred practice of the tribunal members and, above all, the informed consent of the parties to the arbitration.62 Not only would a uniform standard be unlikely to satisfy all parties,63 but, absent such transparency, it may be difficult with regulation alone to ensure that the parties’ expectations, and the tribunal’s practice, are adequately aligned. But while cultivating transparency in the use of arbitral secretaries, we must also remain conscious of the limits of the role, and the limits of secretarial transparency, so that a door is not opened inadvertently and improperly onto le secret du délibéré. Such a state of affairs already exists in other fora, notably the US Supreme Court, where there is an extensive literature that has been written by US Law Clerks to the US Supreme Court disclosing the manner in which decisions are reached by judges in deliberation64—and, as we have seen, many procedural rules specifically provide that arbitral secretaries may attend deliberations. In this regard, it bears repeating that Mr Mallet-Prevost was not an arbitral secretary. But, according to his claims, he found himself in exactly the same position as many secretaries: with access to, and intimate knowledge of, the inner working of an arbitral tribunal’s deliberations. Mr Mallet-Prevost’s clams, regardless of their veracity, illustrate what mischief that knowledge can lead to, if not handled with appropriate responsibility and discretion. In doing so, they remind us that while greater transparency may reinforce the legitimacy of the arbitral process, we must explore with care how the implications of such transparency are translated into arbitral practice. Footnotes 1 Constantine Partasides QC, ‘The Fourth Arbitrator? The Role of Secretaries to Tribunals in International Arbitration’ (2002) 18 Arb. Int’l 147, 163. 2 ibid 147–48. 3 This article uses the term ‘arbitral secretary’ but treats that term as being synonymous with other common titles, notably ‘tribunal secretary’ and ‘administrative secretary’. 4 See Young ICCA Guide on Arbitral Secretaries, The ICCA Reports No 1, Annex B, 67, where a clear majority (58.9%) of respondents to the 2012 ICCA Survey considered that there is a need to ‘change today’s practice with regard to secretaries’. See also P v Q [2017] EWHC 194 (Comm) at 68, where Popplewell J noted the ‘considerable and understandable anxiety in the international arbitration community that the use of arbitral secretaries risks them becoming the “fourth arbitrators”’. 5 Anthony Depalma, ‘Nafta's Powerful Little Secret; Obscure Tribunals Settle Disputes, but Go Too Far, Critics Say’ New York Times (New York, 11 March 2001) <https://tinyurl.com/m4qyzj5> accessed 5 January 2018. 6 See, eg, M Waibel and others (eds), The Backlash against Investment Arbitration (Kluwer 2010). 7 By Bolivia (2007), Ecuador (2009), and Venezuela (2012). 8 By, among others, South Africa, Indonesia, and Poland. 9 The Mauritius Convention on Transparency entered into force on 18 October 2017, following its ratification by three signatory states, Mauritius, Canada, and Switzerland. 10 UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, art 1(4). 11 ‘LCIA Releases Costs and Duration Data’, LCIA (3 November 2015) <http://www.lcia.org/News/lcia-releases-costs-and-duration-data.aspx> accessed 5 January 2018. 12 Art 41 of the VIAC Rules 2013 provides that, unless the Parties’ object, the VIAC may publish anonymized summaries or extracts of the award. 13 See the VIAC website <http://www.viac.eu/en/component/content/article/79-viac/257-selected-arbitral-awards-viac-read-more-e> accessed 5 January 2018. 14 Art 11(4) of the 2017 ICC Rules provides that ‘[t]he decisions of the Court as to the appointment, confirmation, challenge or replacement of an arbitrator shall be final’, omitting the language from the 2012 ICC Rules that ‘the reasons for such decisions shall not be communicated’. 15 See, eg, Victoria Pernt, ‘How Much (More) Transparency Does Commercial Arbitration Really Need?’ Kluwer Arbitration Blog (Kluwer Law International, 4 March 2017). 16 Constantine Partasides QC and Simon Maynard, ‘Raising the Curtain on English Arbitration’ (2017) 33 Arb Int’l 197. 17 ‘Young ICCA Guide on Arbitral Secretaries’ The ICCA Reports No 1, 11, art 3(1). The Guide describes its purpose as to ‘advance a more transparent and robust approach to the role of secretaries in arbitration’. 18 Partasides (n 1) 147, 159 (‘[a]ny such statements are unlikely to enlarge upon the arbitrator’s existing duty not to delegate’ and that ‘[f]raming any safeguards as a code for secretaries as opposed to an obligation on the arbitrator would, moreover, have the inadvertent effect of aggrandizing the secretary by suggesting a role that is independent of that of the arbitrator’ and that ‘any such code would be impossible to police’). See also Toby Landau QC’s warning against ‘legislitis’ (‘an involuntary reaction where ‘if something moves, codify it’’, with ‘people were suffering from “the urge to set down principles encapsulating otherwise self-evident propositions”’ <https://www.ibanet.org/Article/NewDetail.aspx?ArticleUid=16A5FA49-45DC-402E-BD79-6908FF8A0216> accessed 5 January 2018. 19 Young ICCA Guide on Arbitral Secretaries, The ICCA Reports No 1, 11, art 3(1). 20 ibid. 21 ibid arts 3(2)(e)-(j). 22 ‘Guidelines on the Use of a Secretary to the Arbitral Tribunal’, Hong Kong International Arbitration Centre, 1 June 2014, para 1.1. 23 ibid para 3.3. These include transmitting documents and communications on behalf of the tribunal, organizing and maintaining the tribunal’s files, and coordinating logistics for hearings and meetings. 24 ibid para 3.4. 25 ibid para 2.2. 26 ‘Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration’, International Chamber of Commerce, October 2017. 27 ibid s XVII, ¶ 150. The ICC Note includes attending hearing and conducting legal research within a list of ‘organisational and administrative tasks’. 28 ibid s XVII, ¶¶ 151, 153. 29 ibid ¶ 147. 30 ibid ¶ 147. 31 ‘LCIA Notes for Arbitrators’, LCIA, s 8.2. 32 ibid. 33 Arbitration Institute of the Stockholm Chamber of Commerce, Arbitration Rules 2017, art 24(2). 34 ‘Arbitrator’s Guidelines’, SCC, January 2017. 35 ‘Singapore International Arbitration Centre, Practice Note PN – 01/15 (2 February 2015), Administered Cases, On the Appointment of Administrative Secretaries’, SIAC. 36 ‘UNCITRAL, Notes on Organizing Arbitral Proceedings’, UNCITRAL, March 2012, art 1. 37 ibid art 27. 38 Hulley Enterprises Limited (Cyprus) v The Russian Federation, UNCITRAL, PCA Case No AA 226; Yukos Universal Limited (Isle of Man) v The Russian Federation, UNCITRAL, PCA Case No AA 227; Veteran Petroleum Limited (Cyprus) v The Russian Federation, UNCITRAL, PCA Case No AA 228. 39 This is the terminology employed in both the Interim Award on Jurisdiction and Admissibility of 30 November 2008 and the Final Award of 18 July 2014. 40 Writ of Summon of the Russian Federation, 2014, para 490. 41 Russia in fact argued that the advancement in Mr Valasek’s career between 2004 and 2014, from an associate at Yves Fortier’s law firm to a partner at Norton Rose, should have mitigated in favour of him standing down as the arbitral secretary, noting that there was authority to support the proposition that an assistant ought to be replaced if he becomes a well-known arbitrator in his own right. ibid para 505. 42 Russia applied for joinder of the three cases pursuant to art 222 of the Dutch Code of Civil Procedure (DCCP) and, accordingly, the District Court considered the three cases together. 43 Judgment of The Hague District Court, Chamber for Commercial Affairs, C/09/477160/HA ZA 15-1, C/09/477162/HA ZA 15-2 and C/09/481619/HA ZA 15-112, 20 April 2016. 44 DCCP, art 1065(1)(c). 45 DCCP, art 1065(1)(b). 46 Writ of Summon of the Russian Federation, 2014 <https://www.italaw.com/sites/default/files/case-documents/italaw4158_0.pdf>. Russia based its argument on two grounds, namely that (i) the arbitrators had not personally fulfilled their mandate (DCCP art 1065(1)(c)); and (ii) the tribunal was irregularly composed (DCCP art 1065(1)(b). 47 Writ of Summon of the Russian Federation, 2014, ¶ 48. 48 ibid ¶ 497. Russia alleged that, based on the amount that he had billed (EUR 970,562.50) it was apparent that he had spent 3006.2 hours in total working on the arbitration, and had spent 2625 hours on the merits phase. In comparison, Yves Fortier had billed EUR 1,732,937 for the entire arbitration, and spent 1592 hours on the merits phase. Charles Poncet and Stephen Schwebel had spent 1540 hours and 1852 hours, respectively, on the merits phase. In effect, therefore, Mr Valasek had spent 65% more time on the merits than the Chairman. 49 The very fact that the position of Mr Valasek’s name had changed on the cover page of the Final Awards (appearing before the two PCA staff members, Judith Levine and Brooks Daly) as compared with the position on the cover page of the Interim Awards (at the bottom, after Judith Levine and Brooks Daly) showed, Russia suggested, ‘a subtle change that suggests the Tribunal had silently elevated his status above that of the secretary and assistant secretary by the time of its deliberations on the Final Awards’; see ibid ¶ 503. Further, the fact that the Secretariat refused to disclose any further details about the role played by Mr Valasek when requested to do so by Russia, citing the confidentiality of the ‘Tribunal’s deliberations’, was, so Russia argued, another indicator that Mr Valasek had played an excessive role in the decision-making; see ibid ¶ 500. 50 Alison Ross, ‘Valasek wrote Yukos awards, says linguistic expert’ Global Arbitration Review, 20 October 2015 <http://globalarbitrationreview.com/article/1034846/valasek-wrote-yukos-awards-says-linguistics-expert> accessed 6 January 2018. 51 Writ of Summon of the Russian Federation, 2014, ¶ 511(a) (emphasis added). 52 The Monroe Doctrine was a US foreign policy of opposing European colonialism in the Americas. 53 If that name sounds familiar, it may because Mr Mallet-Prevost went on to become one of the founding partners of the law firm Curtis, Mallet-Prevost, Colt & Mosle. 54 During the years 1901–5 the boundary as defined in the Arbitral Award was demarcated by a British-Venezuelan Mixed Boundary Commission. On 10 January 1905, the Boundary Commissioners signed a Joint Report signifying the final delineation of the boundary as demarcated by them and as set out in a map of the entire border. The report with the boundary map was accepted by both governments, and was outwardly accepted by the parties and by the international community as a whole. See Orlando Jesus Fernandez y Gomez, ‘The Guyana-Venezuela Border Dispute: An Analysis of the Reasons Behind Venezuela’s Continuing Demands for Abrogation of the 1899 Anglo-Venezuelan Arbitral Treaty’, A Thesis Presented to the Graduate School of the University of Florida in Partial Fulfilment of the Requirement of the Degree of Master of Arts, University of Florida, 1992. 55 The text of letter is reproduced at Orlando Jesus Fernandez Gomez, ‘The Guyana-Venezuela Border Dispute’, 19–21. 56 Indeed, virtually all major arbitral rules allow (explicitly or implicitly) for the possibility that an arbitral secretary will attend the tribunal’s deliberations. 57 One month before the Mallet-Prevost letter was written, Mr Mallet-Prevost had been decorated by the Venezuelan Government with the ‘Order of the Liberator’, Venezuela’s highest civilian honour. 58 Indeed, in January 2018, the Secretary-General announced his intention to exercise the power conferred upon him by Guyana and Venezuela to refer the dispute to the International Court of Justice; see <https://www.un.org/sg/en/content/sg/statement/2018-01-30/statement-attributable-spokesman-secretary-general-border> accessed 31 January 2018. 59 Partasides (n 1) 147, 156–57. 60 The LCIA’s revised Notes for Arbitrators, which provide that the precise tasks carried out by the secretary to any given tribunal, together with the secretary’s rate of remuneration, must be agreed with the parties, seem to be based on this very approach. 61 Michael Polkinghorne and Charles B Rosenberg, ‘The Role of the Tribunal Secretary in International Arbitration: A Call for a Uniform Standard’, International Bar Association, 5 March 2015 <https://www.ibanet.org/Article/NewDetail.aspx?ArticleUid=987d1cfc-3bc2-48d3-959e-e18d7935f542#_ftn62> accessed 6 January 2018. 62 A clear majority (61.9%) of respondents to the 2012 ICCA survey consider that the ‘tasks and duties’ of the secretary should be negotiated with the parties, second only to the secretaries’ ‘remuneration and expenses’ (79.4%); see Young ICCA Guide on Arbitral Secretaries, The ICCA Reports No 1, Annex B, p 59. 63 For example, in the 2013 ICCA Survey, respondents were divided 49.5% to 50% against permitting arbitral secretaries to ‘review and summarise the parties’ submissions for the Arbitral Tribunal’ and 47.3% to 52.7% against secretaries ‘identify[ing] key documents/pieces of evidence’; see Young ICCA Guide on Arbitral Secretaries, The ICCA Reports No 1, Annex C, 76–77. 64 Partasides (n 1) 147, 149. © The Author(s) 2018. Published by Oxford University Press on behalf of the London Court of International Arbitration. All rights reserved. For permissions, please email: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/about_us/legal/notices)

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Arbitration InternationalOxford University Press

Published: May 25, 2018

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