Emek Insaat Sti Ltd v European Union and the Fourth Arbitrator: The Limits of the Arbitral Secretary’s Role

A recent decision from Belgium’s Cour de Cassation raises an interesting question about the extent to which arbitrators are permitted to delegate tasks to their secretaries – namely, at what point has a tribunal delegated too much responsibility? While this issue – aptly named as the “fourth arbitrator” problem – has received a great deal of scrutiny in international arbitration circles over recent years, it has received little discussion in Canada despite the increased use of tribunal secretaries.

In the Belgian case, stylized for our purposes as Emek Insaat Sti Ltd v European Union (“Emek”),[1] the Court found that an ICC tribunal could allow the Administrative Secretary to draft the award, so long as the tribunal reviews the file and reviews, corrects and validates the award.[2] The Court’s decision echoes the Court of Appeal of the Hague’s decision in 2020 to reinstate three awards against the Russian Federation in international investor-state arbitration proceedings started by shareholders in the now defunct Yukos Oil Company (“Yukos”)[3], and provides food for thought for Canadian practitioners as to the proper boundaries of a tribunal secretary’s authority.

The Decision

In Emek, the Court upheld a lower court’s interpretation of the “Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration Under the ICC Rules of Arbitration”, dated January 1, 2019 (the “ICC Note”),[4] which bound the tribunal and which stated at paragraphs 184 and 187 as follows:

184. The tasks entrusted to an Administrative Secretary shall in no circumstances release the arbitral tribunal from its duty to personally review the file. Under no circumstances may the arbitral tribunal delegate its decision-making functions to an Administrative Secretary. Nor shall the arbitral tribunal rely on an Administrative Secretary to perform on its behalf any of the essential duties of an arbitrator.

 

[…]

 

187. 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. [emphasis added]

The lower court concluded that paragraph 184 required the tribunal to personally review the file, and that therefore the “and/or” in paragraph 187 must permit the Administrative Secretary to draft any decision (i.e., award) of the tribunal, so long as the tribunal corrects and validates the decision. If paragraph 187 did not permit the Administrative Secretary to draft a decision, the lower court reasoned, then the ICC Note would not have used the phrase “and/or”.[5]

The Cour de Cassation also held effectively that because the Administrative Secretary is explicitly permitted under paragraph 187 to prepare notes and memoranda, which could form the basis of the award or even form part of the award, the secretary’s drafting of the award itself would not amount to an improper delegation, by the tribunal, of its jurisdiction.[6]

Analysis

To Canadian readers, the lower court’s interpretation of paragraph 187 of the ICC Note, adopted by the Cour de Cassation, seems somewhat artificial in its construction, and is arguably inconsistent with other provisions of the ICC Note. If the “and/or” in paragraph 187 were meant to allow the tribunal either to review the file or to draft the award, then that would conflict with paragraph 184, which requires the tribunal to review the file.

Since, in light of paragraph 184, paragraph 187 cannot “release the arbitral tribunal from its duty personally to review the file”, the “and/or” in paragraph 187 does not appear in fact to be disjunctive in nature. It is arguable that paragraph 187 should not be read as releasing the tribunal from its duty personally to “draft any decision” on the basis simply that the tribunal reviewed the file.

As well, if the word “and” or the word “or” had been used alone, paragraph 187 would likely be interpreted to mean that the tribunal is required to both review the file and draft the award. While “and/or” typically means “both or either,” the slash between “and” and “or” in this case may have indicated that the author(s) of the ICC Note did not feel compelled to commit to either word, given that each word, used alone, would have imported the same meaning. It is not unheard of for synonyms to be separated by a slash – indeed, legal doublets, such as “null and void,” “over and above,” “covenant and agree,” “from now and henceforth” are pairs of synonyms that are used today in legal writing essentially for the sake of emphasis rather than to express different concepts.

Further it should be noted that paragraph 185 of the ICC Note enumerates the tasks that an Administrative Secretary can perform, none of which suggest the authority to draft an award  (except for the undisputed factual portions):

185. Notwithstanding the above, an Administrative Secretary may perform organisational and administrative tasks such as:

• transmitting documents and communications on behalf of the arbitral tribunal;
• organising and maintaining the arbitral tribunal’s file and locating documents;
• organising hearings and meetings and liaising with the parties in that respect;
• drafting correspondence to the parties and sending it on behalf of the arbitral tribunal;
• preparing for the arbitral tribunal’s review drafts of procedural orders as well as factual portions of an award, such as the summary of the proceedings, the chronology of facts, and the summary of the parties’ positions;
• attending hearings, meetings and deliberations; taking notes or minutes or keeping time;
• conducting legal or similar research; and
• proof-reading and checking citations, dates and cross-references in procedural orders and awards, as well as correcting typographical, grammatical or calculation errors.

It could be argued that paragraph 185 of the ICC Note would permit the Administrative Secretary to attend a hearing in an arbitrator’s stead, because it states that the Administrative Secretary’s responsibilities can include “attending hearings, meetings and deliberations; taking notes or minutes or keeping time”. Of the same token the ICC Note does not state explicitly that arbitrators must attend hearings. Accordingly, if the Cour de Cassation’s logic were extended, it would be arguable that that an arbitrator could meet the requirements of the ICC Note simply by reviewing the notes or minutes kept by the Administrative Secretary. This would seem to be an insupportable outcome, though, insofar as the fundamental principle of a the right to a fair hearing would logically include the right to be heard  by the person(s) adjudicating the matter.

In light of the above, it may therefore be that the Cour de Cassation’s interpretation of “and/or” in the ICC Notes will have limited persuasive value outside of Belgium.

Even so, it is worth noting that a revised “Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration Under the ICC Rules of Arbitration” came into effect on January 1, 2021 (the “Revised ICC Note”), and contains the following language to replace paragraph 187 of the 2019 version:

223. Under no circumstances may the arbitral tribunal delegate its decision-making functions to an administrative secretary or rely on an administrative secretary to perform on its behalf any of the essential duties of an arbitrator. Likewise, the tasks entrusted to an administrative secretary, such as the preparation of written notes or memoranda, will not release the arbitral tribunal from its duty to personally review the file and/or draft itself any arbitral tribunal’s decision.

The content of paragraph 184 has been removed in the Revised ICC Note. While the “and/or” language remains, the provision that the Belgian lower court relied on in its decision is no longer part of the Revised ICC Note.

Commentary

While, in our view, the Cour de Cassation’s interpretation of “and/or” would arguably not be adopted by a Canadian court, and despite the fact that Belgian law is of limited persuasive value in Canada, Emek nevertheless highlights a key issue as to the proper role of tribunal secretaries and the perils of over-delegation. This is particularly true where there is no case law in Canada that provides guidance as to the boundaries of delegation, where the ICC Note is only applicable to ICC proceedings, and where the role of tribunal secretaries has been a live issue in the arbitration community for several years, generating commentary from both practitioners and institutions.

As a practical matter, readers will appreciate that tribunals often delegate tasks to the secretary as a means of reducing costs to the parties, making proceedings more efficient, and otherwise freeing up the tribunal’s time for its adjudicative responsibilities. Indeed, this aligns with the proposition (expressed in many institutional rules) that an arbitration should be economical and proportion to the dispute at hand. In that regard, paragraph 185 of the ICC Note provides a helpful enumeration of various activities that fall within the bounds of permissible delegation, all of which could broadly be described as administrative, organizational, or clerical in nature rather than adjudicative.

However, as noted in the Revised ICC Note, tribunals should not delegate their decision-making functions or allow staff to perform “essential duties” of an arbitrator. In that regard, it is not always clear where to draw the line, particularly where there has also been no judicial consideration in Canada as to what constitutes an “essential duty” of an arbitrator. Arguably, a secretary drafting an award might not constitute an abdication of responsibility by the tribunal, if the arbitrator were to then scrutinize the draft award and independently reach their own conclusions as to the disputed issues. In that regard, the secretary’s draft award would simply be “for consideration” by the tribunal. On the other hand, however, it could credibly be argued that the delivery of a draft award naturally frames the manner in which the tribunal will assess the disputed issues, and might therefore predispose them to some form of unconscious bias. Ultimately, the key consideration is likely that the tribunal has preserved its exercise of independent judgment.[7]

As a result, it unsurprising that many institutions (such as the LCIA, SIAC, HKIAC, ICCA, and the IBA under its Guidelines on Conflict Interest) have either incorporated sections within their arbitral rules concerning the scope of a secretary’s duties, or else have published freestanding commentary or guidelines in respect of the issue. Given that practitioners’ perception of the practice is critical to bolstering its legitimacy – i.e., the adage that justice must be seen to be done – such consideration by leading institutions is welcome. Generally, those institutions have taken a more conservative approach, explicitly prohibiting the delegation of decision-making and otherwise mandating strict scrutiny by the tribunal of the secretary’s performance, as well as mandating that the tribunal’s duties of independence and impartiality apply with equal force to the secretary.[8]

Practically speaking, however, the act of drafting is rarely a solitary task even in the litigation context. Indeed, in North America, it is common in many fields (including legal practice) for subordinates to draft documents under the direction, supervision and/or guidance of the individual(s) engaged to do so. What is ultimately important is that the final author assumes responsibility for its content, with the implicit understanding that they have scrutinized and approved of the document’s specific contents, even if they themselves did not draft every word. As such, the line between appropriate and inappropriate delegation might rest at least partly in the eye of the beholder.

Finally, the Cour de Cassation’s decision also echoes the Court of Appeal of the Hague’s decision in the Yukos cases. In that decision, the Court of Appeal rejected the Russian Federation’s argument that the tribunal’s assistant was effectively an unacknowledged “fourth arbitrator”. The Court of Appeal found no evidence that he had participated in decision-making, even if he may have played a significant role in drafting the awards. The Court of Appeal rejected the idea that only the drafting of memoranda and factual portions of an award would be permissible, while the drafting of the “decisive” portions would not be under any circumstances.

While these two decisions are, as noted, unlikely to be of persuasive authority under Canadian law due to a lack of historical reliance by Canadian courts on Belgian decisions (to say nothing of the differing legal systems), Emek nevertheless raises the interesting question of how a Canadian court might resolve this issue should it present itself in future.

On the one hand, Emek is consistent with Yukos and the practical realities of legal practice; on the other hand, however, the balance of institutional and critical commentary arguably suggests a more conservative approach. Between these two positions, the England & Wales High Court’s decision in P v Q and Ors – which would be of greater persuasive authority to a Canadian court, given its provenance – strikes a middle ground, suggesting that the ultimate consideration remains whether the tribunal has or has not abrogated or impaired its non-delegable and personal decision-making function (in other words, its independent judgment).[9]

Ultimately, the answer will depend on the circumstances of each case, including the applicable institutional rules and guidelines agree to by the parties. While it is difficult to reach a definitive conclusion as to the appropriate boundaries of delegation in the absence of Canadian case law, the safest practice for arbitrators remains for them to delegate judiciously and to carefully scrutinize those tasks that have been delegated, applying their own personal judgement throughout.

[1] Court file number C.21.0548.F (European Case-Law Identifier: ECLI:BE:CASS:2023:ARR.20230424.3F.1).

[2] C.21.0548.F/5 (i.e., page 5 of the decision).

[3] European Case-Law Identifier: ECLI:NL:GHDHA:2020:234.

[4] The ICC Note can be accessed at https://iccwbo.be/icc-issues-updated-note-providing-guidance-to-parties/.

[5] C.21.0548.F/5 (i.e., page 5 of the decision).

[6] C.21.0548.F/5 (i.e., page 5 of the decision).

[7] In that regard, see the England & Wales High Court’s decision in P v. Q and Ors [2017] EWHC 194 (Comm) at para 65.

[8] On the other hand, the ICCA’s Young ICCA Guide on Arbitral Secretaries at Article 3 suggests that “the role of an administrative secretary ‘may legitimately go beyond the purely administrative’” with appropriate direction and supervision by the tribunal. Ultimately, that Article provides rather generally that in such circumstances, a secretary could be involved in drafting “appropriate” parts of the award.

[9] P v Q and Ors [2017] EWHC 194 (Comm) at paras 65-66.

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