English court endorses typical use of tribunal secretary in LCIA arbitration

The English Court has rejected an arbitrator challenge under s24 of the English Arbitration Act 1996 (the Act) on the basis of alleged "over-delegation" of their duties to their secretary. The Court's decision was based on a review of the Act, the LCIA Rules 1998, the various guidelines on the use of Tribunal Secretaries, academic commentary and previous English case law. In addition, the Court noted that it should be slow to depart from the conclusions of the LCIA Court on the same grounds of challenge.

This is a valuable judicial discussion of the practical use of tribunal secretaries and demonstrates that the Court will give robust consideration to whether the grounds of s24 are made out with regard to the use of a secretary.  

See P v Q 2017 EWHC 194 (Comm).

Procedural background – underlying arbitration and challenge to the LCIA Court

Q commenced an arbitration against P under the LCIA Rules. The arbitrators –"experienced" and of "distinguished backgrounds" – appointed a Tribunal Secretary (the Secretary).

During the proceedings, the Chairman inadvertently sent to P's legal team an email (the Misdirected Email) intended for the Secretary asking "Your reaction to this latest from [P]?". P then requested a description of all tasks allocated to the Secretary and sought disclosure of certain communications between the Tribunal and the Secretary. The Tribunal outlined the Secretary's role, but denied the request for documents.

P filed a challenge with the LCIA Court, seeking to remove all three Arbitrators. The grounds included:

1. comments made by the Chairman at a conference gave rise to justifiable doubts about his independence and impartiality;
2. improper delegation of the Tribunal's role by entrusting the Secretary with tasks beyond those permitted by the LCIA Rules and policies; and
3. breach by the Tribunal of its mandate and duty not to delegate.

To justify these allegations, P relied on the Misdirected Email and its analysis of the time spent by the arbitrators and the Secretary in relation to certain procedural decisions (the Decisions).

In response, the arbitrators explained to the LCIA Court that the co-Arbitrators' decision-making process consisted of considering the parties' submissions, considering a draft decision prepared by the Chairman and approving it or discussing revisions (as appropriate). They also explained that the tasks undertaken by the Secretary included organising papers for the Tribunal, highlighting relevant legal authorities, maintaining factual chronologies, preparing drafts of orders and correspondence for consideration by the Tribunal and  sending correspondence on behalf of the Tribunal.

The LCIA Court dismissed the challenges based on use of the Secretary but revoked the appointment of the Chairman, on the basis of comments made at a conference. After appointment of a new chairman, the re-constituted Tribunal reconsidered the Decisions and decided that they should stand.

P filed (i) a s24 challenge in the English court to remove the co-Arbitrators, on the basis that they had failed properly to conduct the proceedings and that substantial injustice had (or would be) caused to the applicant, and (ii) an ancillary application for disclosure of a wide range of communications between the co-Arbitrators and the Secretary related to the Secretary's role or any tasks allocated to him. The grounds for P's s24 application developed over time, as discussed below.

Application for disclosure of communications between Tribunal and Secretary

The Court dismissed the disclosure application, applying by analogy the principle established in the Locabail case, which shields judges and judicial decision-makers from disclosure related to the decision-making process.

Application under Section 24 – failure properly to conduct the proceedings (Limb 1)

The "Adjudicative Function Argument":

P argued that the co-Arbitrators failed to exercise their adjudicative responsibilities personally and improperly delegated these to the Secretary. However, the Court found the co-Arbitrator's decision-making process, as explained by the co-Arbitrators, to be "entirely proper". It ensured that the decision reflected "the views of all three members whilst avoiding unnecessary delay or expense on procedural matters as the tribunal is bound to seek to do pursuant to [its duty under] s. 33(1)(b) of the Act" [¶ 33]. The co-Arbitrators were empowered under Art. 14.3 of the LCIA Rules to delegate authority to the Chairman to make the Decisions. The Court agreed with the LCIA Court that the time spent by the co-Arbitrators in discharging their mandate was sufficient, noting that it should be "very slow to differ from the view of the LCIA [Court]", which was the parties' chosen forum for resolution of the question. Given its experience, the LCIA Court was well-placed to judge how much time would be required to consider issues of this type.  

The "Indirect Delegation Argument":

P argued that the Chairman's improper delegation to the Secretary resulted in the improper delegation by the co-Arbitrators. In rejecting this argument, the Court examined what it called "a divergence of views amongst practitioners and commentators as to the appropriate use of tribunal secretaries" [¶ 51]. It found that the "critical yardstick" for the purposes of s24 is that the use of a secretary must not involve any arbitrator "abrogating or impairing his non-delegable and personal decision-making function. That function requires each member of the tribunal to bring his own personal and independent judgment to bear on the decision in question, taking account of the rival submissions of the parties; and to exercise reasonable diligence in going about discharging that function. What is required in practice will vary infinitely with the nature of the decision and the circumstances of each case" [§65].

In this case, the parties had agreed on the use and identity of the Secretary and conferred on the Tribunal by way of Art.14.2 of the LCIA Rules (now Art. 14.5 of the 2014 Rules) "the widest possible discretion as to how to go about discharging their core decision-making responsibilities with the assistance of a tribunal secretary" [§66].

The Court found that, to avoid the risk of a secretary becoming a "fourth arbitrator", the decision-making process should be that of the tribunal alone. The safest way to ensure this is for the secretary not to be tasked with expressing a view on the substance of an application or issue [§68]. However, failure to follow best practice is not synonymous with failing properly to conduct proceedings within the meaning of s24(1)(d) of the Act. Soliciting the views of others (as the Chairman did in the Misdirected Email), did not of itself demonstrate a failure to discharge the personal duty to perform the decision-making function [§69].

The Court also again noted that it should be slow to differ from the LCIA Court's conclusion.

The "Supervision Argument":

P argued that the co-Arbitrators failed to comply with an alleged duty to supervise the Chairman to satisfy themselves there was no improper delegation to the Secretary. However, the Court stated that there was no such duty.

The "Secretary Tasks Delegation Argument":

P alleged that the co-Arbitrators improperly delegated to the Chairman the responsibility for determining the Secretary's role. The Court found that it was entirely appropriate for the chairman of an experienced tribunal to be left to determine the tasks of a secretary and the co-arbitrators may proceed on the assumption that the secretary will be tasked appropriately in the absence of something to alert them to the contrary [§73].

The "Misrepresentation Argument":

P argued that the co-Arbitrators negligently and/or innocently misrepresented the position as to the existence of a delegation of their roles to the Secretary, as well as the nature and/or extent and/or effect of such delegation. However, this argument was not asserted before the LCIA Court. The Court found that P had therefore not exhausted any available recourse to an arbitral or other institution pursuant to s24(2), such that the Court could not exercise its power under s24. In any case, the Court found that there was no misrepresentation. The explanation of the decision-making process demonstrated that the co-Arbitrators were denying improper delegation of tasks reserved to Tribunal members, and not denying delegation of any tasks whatsoever.

Substantial Injustice (Limb 2)

The Court concluded that, even if it were wrong in rejecting the application under the Limb 1 of s24, P had nonetheless failed to show how a different approach would have been taken but for the alleged failures. Further, the nature of the Decisions was not such as to be capable of causing substantial injustice.

The only specific injustice identified by P was an assertion that a finding of improper delegation would entail a breakdown of trust and confidence. The Court found, by reference to Conder Structures v Kvaerner Construction Ltd (unreported, 15^th April 1999), that absent some concrete or substantive prejudice, a professed loss of confidence was not capable in itself of constituting substantial injustice.

Comment

The scope of the secretary's role is a hot topic and has been the subject of various guidelines and courses by institutions across the globe.  While this judgment turned on its own facts, it demonstrates support for a particular method of using a secretary that is likely to be representative of many international tribunals.

This judgment is also a reminder of the importance of institutional mechanisms for dealing with challenges to arbitrators and of the deference English courts will accord to the institutions where they are given the power to determine challenges. 

Further, the arbitral community can welcome the clarification in the Court's judgment on the ancillary application for disclosure that the long-established principle of confidentiality of judges' deliberations has been confirmed to apply to arbitrators, and, therefore, documents between them or the tribunal secretary will, apart from extreme cases, remain confidential.

For further information, contact Chris Parker, Partner, Maximilian Szymanski, Associate, Tammi Pilgrim, Arbitration Intern, Hannah Ambrose, Professional Support Consultant, Vanessa Naish, Professional Support Consultant, or your usual Herbert Smith Freehills contact.