By Tham Wei Chern, Selvam LLC

CASE LAW DEVELOPMENTS

There are no reported Singapore cases on arbitration during the period between the December 2017 newsletter and the production of this update. We therefore turn our attention in this issue outside of Singapore, and review the recent decision in the English case of P v Q and others (No 2) [2017] 1 WLR 3823.

P v Q and others (No 2) [2017] 1 WLR 3823

This is a decision of the English High Court in relation to the use of tribunal secretaries.

The Claimant in this case made an application to the English High Court to remove two co-arbitrators (the “Respondents”) on an arbitral tribunal pursuant to section 24(I)(d)(i) of the English Arbitration Act 1996 for failing to properly conduct proceedings in relation to the use of a tribunal secretary (the “Secretary”) to analyse submissions and draft procedural orders.

The Court dismissed the application, and held that such use of a tribunal secretary was not an improper delegation of the tribunal’s decision making functions, and gave some guidance on the use of the tribunal secretaries.

Arbitrators in Singapore will find this case useful in providing guidance on the best practices on the use of tribunal secretaries.

Facts

The Claimant was the respondent in an arbitration governed by the London Court of International Arbitration Rules (the “LCIA Arbitration”), and the two Respondents were the party appointed arbitrators.  Together with the chairman of the tribunal, the two Respondents formed the tribunal for the LCIA Arbitration.

The chairman appointed the Secretary with the agreement of the parties to the LCIA Arbitration.

The Claimant was also engaged in another arbitration relating to the same rights that were in issue in the present one, but with another party.

In the LCIA Arbitration, the tribunal made three procedural directions, which were the subject of the Claimant’s application.  These were for: (a) sharing of documents between the two arbitrations; (b) refusing the claimant’s application to stay the present arbitration until after the other arbitration had been heard; and (c) production of documents (together, the “Decisions”).

A month after the Decisions were made, the chairman of the tribunal sent an email intended for the Secretary, but which was mistakenly sent to the Claimant’s lawyers, asking for the Secretary’s “reaction to this latest from the [Claimant]” (the “Misdirected Email”).  This was in relation to the Claimant’s request for an extension of time.

The Claimant filed a challenge with the LCIA Court to have all three members of the tribunal removed on the following grounds.  The LCIA Court revoked the appointment of the chairman (on different grounds), but not that of the Respondents.

The Claimant then filed the present application on the following grounds:

(a)        the Respondents had improperly delegated their role to the Secretary by systematically entrusting the Secretary with a number of tasks beyond what was permissible under the LCIA Rules and the LCIA policy on the use of arbitral secretaries;

(b)        the Respondents had breached their mandate as arbitrators and their duty not to delegate by not sufficiently participating in the arbitration proceedings and the decision-making process; and

(c)        the Respondents had negligently and/or innocently misrepresented to the Claimant the position as to the existence and/or nature and/or extent and/or effect of the delegation of their roles to the Secretary (this ground was not raised to the LCIA Court).

The Claimant’s complaint was largely based on the hours spent by the Secretary and the Respondents, and the Misdirected Email.

Judgment

Popplewell J, who heard the matter, found that the Respondents had not delegated their role to the Secretary.

In coming to his decision, Popplewell J reviewed the amount of time spent by each of the Respondents on the various directions, and found that, with the benefit of his own experience, that the time spent was appropriate and proportionate.  In this regard, the Respondents’ recorded time spent on each of the Decisions was significant and sufficient in the particular circumstances.

Further, Popplewell J held that, the court should be slow to differ from the conclusion of the LCIA Division, which made a similar finding.  In this regard, Popplewell J held that the LCIA Division was not only the parties’ chosen forum, but also had considerable experience and was well placed to judge how much time would be required for a co-arbitrator properly to consider interlocutory issues.

The Claimant had also argued that the Respondents had indirectly delegated their role to the Secretary because they had left the chairman to prepare the draft decisions, and the chairman had left that task to the Secretary.  In this regard, Popplewell J, found that the Claimant’s arguments were misconceived.  First, they were logically incoherent, as no part of the Respondents’ adjudicatory responsibility was delegated to the chairman.

Second, the reliance by the Respondents on the chairman to produce the first draft of interlocutory decisions for their review was entirely legitimate, and this did not become illegitimate simply because the chairman delegated such task to the Secretary irrespective of the Respondents’ knowledge.

Third, there was no basis for concluding that the chairman’s use of the Secretary in relation to the Decisions involved delegating to the Secretary any adjudicative functions or responsibilities, or was in any way inappropriate.  In this respect, the tribunal had explained the role of the Secretary as operating within the parameters circumscribed by the LCIA’s ‘notes for arbitrators’, the LCIA website’s ‘What is the LCIA’s position on the appointment of secretaries to tribunals?’ and the ‘Young ICCA guide on arbitral secretaries’.  In particular, the Secretary was engaged in “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.”

As for the Misdirected Email, the chairman had explained that he was simply requesting a response from the Secretary as to the status of outstanding issues relating to the tribunal’s first, second and third decisions on document production based on a letter sent by Claimant’s counsel on 22 March 2016.

In his decision, Popplewell J noted that there was nothing offensive per se to an adjudicator’s performance of his adjudicatory function in receiving the views of others, provided that the adjudicator makes his own mind up by the exercise of independent judgment. He also observed that there was considerable and understandable anxiety in the international arbitration community that the use of tribunal secretaries risked them becoming “fourth arbitrators”. 

Popplewell J therefore noted that best practice would be to avoid involving a tribunal secretary in anything which could be characterized as expressing a view on the substance of that which the tribunal was called upon to decide.  However, he also expressed the view that a failure to follow best practice was not synonymous with failing properly to conduct proceedings within the s 24(1)(d) of the Arbitration Act 1996, and soliciting or receiving any views of any kind from a tribunal secretary did not of itself demonstrate a failure to discharge the arbitrator’s personal duty to perform the decision-making function and responsibility himself.  This would especially be the case, such as in the present, where the arbitrator was an experienced judge who would be used to reaching independent decisions which were not inappropriately influenced by suggestions made by junior legal assistants.

In respect of the misrepresentation argument, Popplewell J rejected the Claimant’s arguments as these had not been previously raised to the LCIA Court.  Further, the Claimant’s allegation of what was represented was neither a realistic nor fair reading of the relevant passages of the letters sent by the tribunal.

Popplewell J also held that there was no substantial injustice, as it could not be seriously suggested that the Respondents had adopted a decision-making process that went beyond anything that could reasonably be defended.  Moreover the Claimant had not shown that the decisions might have been different had the Respondents taken a different approach to decision-making. 

The only specific injustice identified by the Claimant was that a finding of improper delegation would entail a wholesale breakdown of trust and confidence on the part of the Claimant in the Respondents as co-arbitrators.  However, Popplewell J held that loss of confidence was neither sufficient nor a necessary condition of substantial injustice.

Points to note

While this decision dealt with the situation under the English Arbitration Act 1996, it provides useful guidance to arbitrators practicing in Singapore on good practice in relation to the appropriate usage and of tribunal secretaries.