Arbitration has long had a practice of arbitrators doing their own work. As a result, senior lawyers from large law firms have had to adjust to organizing their own files and conducting the kind of review of records and legal sources that, in their practice, they delegate to junior lawyers. But this is not the universally followed practice, particularly in continental Europe, where persons known as law secretaries assist arbitral tribunals.
Recent guidelines issued by two institutions that administer arbitrations — the International Chamber of Commerce and JAMS — have dealt with the issues raised by the use of law secretaries, and do so in markedly different ways.
The most recent White & Case/Queen Mary College survey of arbitration users and practitioners confirms what was generally understood through anecdotal evidence: that law secretaries are fairly commonly used, especially in Continental Europe, where, according to the survey, they were used by 35 percent of the respondents, compared to much lower percentages in the United States and Asia. The law secretary is frequently a young lawyer who is retained by the tribunal, usually the chairman of a three-person panel, to assist in various ways in the conduct of an arbitration and the preparation of the award.
But there can be troubling consequences of the use of law secretaries. For example, a young lawyer may be working with the tribunal unbeknownst to the parties. This individual’s identity, background and role may not be disclosed to the parties, nor any conflicts of interest that might exist be explored.
Issues that arise from the use of law secretaries include whether they should be used at all, the duties they perform, the disclosure of their involvement and their compensation.
While the consent of the parties is usually requested prior to the appointment of the law secretary, this is not a universal practice, nor is disclosure of the background of the secretary. Parties are often required to pay separately for the secretaries, over and above the compensation to the arbitrators and other related costs, and the duties of the law secretaries include not only those of an administrative nature but it is also common for secretaries to draft certain portions of awards. Indeed, in some cases, law secretaries prepared a first draft of the award in its entirety.
The shifting of a portion of the arbitrator’s responsibilities to others has at least two logical effects: the reduction of the workload of arbitrators, thereby permitting them to take on more cases and the opportunity for young lawyers to gain experience in international arbitration.
The ICC Note on Secretaries
The International Chamber of Commerce issued, on Aug. 1, 2012, a note on the “appointment, duties and remuneration of administrative secretaries.”
The note states that it sets out the policy and practice of the ICC International Court of Arbitration and its Secretariat regarding the engagement of administrative secretaries by arbitral tribunals and requires that any arbitral tribunal proposing to appoint an administrative secretary provide the parties with a copy of the note. Consequently, even though the ICC rules concerning the conduct of the arbitration proceedings do not deal with the issue of secretaries, tribunals operating under those rules are obliged to comply with the note.
The note prevents a tribunal from imposing a secretary on the parties. Any tribunal proposing the appointment of an administrative secretary must submit to the parties the individual’s curriculum vitae, together with a declaration of independence. It also imposes an obligation both on the tribunal and the secretary to comply with the provisions of the note regarding the permissible duties of an administrative secretary.
In contrast, JAMS issued, effective May 5, 2012, Guidelines for Use of Clerks in Arbitrations, which are considerably looser than the provisions of the ICC Note. Although the guidelines require that “arbitration clerks” complete a separate conflicts disclosure form on a JAMS form, this form, when filled out is not “made available” to the parties until “immediately following the engagement of a clerk in the case.”
It would thus appear that the parties are not given the same kind of peremptory right that the ICC affords, simply to object to the appointment of any clerk. Moreover, under the JAMS Guidelines, it appears that it will be incumbent on the parties to raise objections on the basis of conflicts of interest should they wish to take this initiative. Such an application will not, realistically, be often made by any party in the face of the arbitrators’ expressed desire to have a particular individual as a clerk.
The JAMS Guidelines also require that the tribunal explicitly disclose the duties of the clerk. Apart from this disclosure requirement, the JAMS Guidelines impose no limits on the arbitrators’ use of clerks for any purpose whatsoever relating to the arbitration.
In contrast, the ICC Note permits the secretary to perform “organizational and administrative tasks,” and lists examples of such tasks, including communicating with the parties on behalf of the tribunal, organizing meetings, maintaining files, taking notes and minutes and proofreading and checking citations in procedural orders and awards. The note goes on to say, “under no circumstances may the Arbitral Tribunal delegate decision-making functions to an Administrative Secretary.”
No comparable restrictions are contained in the JAMS Guidelines.
The ICC note makes clear that the tribunal may not pass on to the parties the costs of the administrative secretary, other than the secretary’s personal disbursements. Any fees payable to the administrative secretary are, under the Note, to be paid by the tribunal out of the total funds available for the fees of all arbitrators. The note adds that any direct arrangements between the tribunal and the parties regarding the secretary’s fees are prohibited.
The JAMS Guidelines, on the other hand, expressly permit the clerk’s fees to be billed to the parties, provided that the compensation arrangement is disclosed to the parties. If there is no agreement, the clerk is to be paid by the arbitrators without reimbursement by the parties.
The JAMS Guidelines contain a curious provision that appears to contemplate the possibility that the services of a clerk may be provided on a basis that generates a profit. The guidelines expressly state that there is “no guideline on whether clerks can be billed at more than they are paid by the arbitrator and how the surplus will be allocated.” The guidelines do, however, remind arbitrators that they may not “add to their billed time to cover non-billed time for clerks or assistants,” meaning, apparently, that it is not permitted for arbitrators to charge the parties for time that the arbitrators might have spent had it not been for the fact that work is done by clerks whose cost is not passed on to the parties.
Thus, the JAMS arbitrators are given far greater latitude regarding their use of secretaries than the ICC permits to arbitrators operating under its rules. Whether this latitude is intended to encourage the greater use of secretaries in the U.S. arbitration culture, where such secretaries are infrequently used, is not clear.
And, of course, in the part of the world of international arbitration where proceedings are not conducted under the ICC rules, the use of law secretaries remains restricted only by the restraint shown by arbitration tribunals.