Here is a long excerpt from the recent annulment decision in the Vivendi case before an ICSID ad hoc committee, in which the role of the ICSID Secretariat is called into question:
Additional Opinion of Professor JH Dalhuisen under Article 48(4) of the ICSID Convention
1. Before ending the discussion, I should like to deal with the role of the ICSID Secretariat in this matter which has led to multiple complications and has delayed the final decision by many months.
2. It is clear that the Secretariat wants to obtain for itself a greater role in the conduct of ICSID cases and in the process also wants to involve itself in the drafting of the decisions. So also in this case. I believe this in general to be outside the Secretariat´s remit and undesirable.
3. The role of the Secretariat in ICSID is substantially defined in Article 11 of the ICSID Convention and in Chapter V of the Administrative and Financial Regulations. It is a role of administration and support; it is clear that the Secretariat has no original powers in the dispute resolution and decision taking process.
4. As a minimum, the Secretariat is keen to do the recitals, but as the recitals in this case also show, by accommodating the Secretariat’s involvement, they are becoming longer and longer. To do it properly, choices need to be made and it is hardly the task of the Secretariat to make them. What are the key facts and relevant arguments and how they should be presented in the final decision or award is for Arbitrators or ad hoc Committee Members to select and decide.
5. Any other approach leads easily to a disjointed expose of arguments, counter-arguments, and decisions, especially in cases like the present one in which virtually everything was contested. Moreover, getting some presentable text out of the Secretariat in these circumstances delayed the final result considerably.
6. Although summarising the arguments may well be helpful, it should ideally be done much earlier in the case before the hearing so that such a summary could be tested by Arbitrators or ad hoc Committee Members in the oral proceedings. If preparatory help of this nature is needed, Arbitral Tribunals or ad hoc Committees may be wiser to appoint their own assistant subject to their full control and direction. Any text tested in this manner might in appropriate cases then serve as part of the final award or decision.
7. For the Secretariat also to draft part or all of the decisions and reasoning would appear wholly inappropriate, even if following basic instructions of Arbitrators or ad hoc Committee Members whilst the final version would naturally still be left to them for approval. This would not appear to be sufficient to legitimize the text.
8. During cross-examination it was asked why and questioned how some arbitrators could do so many cases. One way is to farm out the drafting to others, in the case of ICSID to the Secretariat. There appears to be much appreciation for this by busy arbitrators but it is improper.
9. In this case, the ICSID Secretariat even took the view that on its own initiative it could intervene to “streamline” the texts earlier agreed by the present ad hoc Committee and senior Secretariat members approached individual Committee Members informally with a view to amending the text. This naturally caused great stress in the Committee, raising many fundamental issues of propriety, independence, open and direct communication between Committee Members, and confidentiality.
10. It is relevant in this connection to note that a practice appears to have developed in ICSID whereby all communications, also those between the Chairman and ad hoc Committee Members (or Arbitrators as the case may be) are conducted through the Secretariat, but this is not the system of the Convention, quite apart from the question whether it gives the Secretariat subsequently power to intervene.
11. Under Regulation 24(1)(b), the communication between ad hoc Committee Members (and Arbitrators as the case may be) is specifically carved out from intermediation through the Secretariat and this is so during the full pendency of the proceedings.
12. This ties in with Arbitration Rule 15 which makes the deliberations private and secret. Only Members of the ad hoc Committee (or Arbitrators as the case may be) shall take part and no other persons are admitted.
13. These rules stand to reason and are mandatory. It may be doubted whether they can be waived, which would at least require the consent of all Committee Members (or Arbitrators). It means that the deliberations and related exchanges cannot properly be conducted through the Secretariat. The role of the Secretariat in record keeping (to the extent records exist) does not distract from these rules; the deliberations are not part of the record in this sense.
14. The need for this system to be respected is especially clear in a case like the present one where serious reputational issues are at stake. Privacy and secrecy are here of the essence to promote free communication whilst protecting ad hoc Committee Members (or as the case may be Arbitrators) but no less the persons whose reputation may be affected. It should be noted in this regard that the Secretariat, whilst receiving any of this information, appears to be under no similar secrecy obligation.
15. However this may be, the ICSID Secretariat is not entitled to this information and can not act on it at will. On the basis of what it sees, it may well be able to take the initiative in alerting the Committee to clear mistakes or oversights but it should do so in writing, to all Members simultaneously, and not otherwise intervene in any way, except if formally asked to do so by the Committee for clearly defined purposes which should never affect the substance of the case, either directly or indirectly.
16. Another idea seems to be that the Secretariat is the voice of a jurisprudence constante which it is its task to advance and protect and which gives it an autonomous right of intervention. This is also profoundly mistaken and may be seriously prejudicial to the parties. In any event, it is far too early to assume the existence of such a jurisprudence and its status as law would be uncertain even if it existed. It may be recalled that in international law, there has never been a rule of binding precedent and this is so for very good reasons.
17. For the moment, the formulation of any such jurisprudence must be left to academics whilst it should be appreciated that to engage in a form of system creation in this manner or of thinking in academic models is not necessarily objective and free of intellectual prejudice or other bias. It is in any event not the allotted task of the Secretariat to assume the academic mantle and it is not, and could not be staffed for it.
18. The Secretariat should not have a policy or view in these matters but respect the authority and independence of the Arbitral Tribunals and ad hoc Committees which must find the law on the basis of the facts as they present themselves to them. This does not, of course, rule out that earlier cases may have persuasive value but it is for the relevant Tribunal or ad hoc Committee to decide in each instance, taking into account the submissions of the parties.
19. Submissions by the Secretariat, whatever the intention, are here legally irrelevant and no more than unsolicited opinion. Not being subject to examination by the parties, they cannot carry any weight.
20. Decisions of this nature are also not legal textbooks or preachers’ manuals and ad hoc Committees or Tribunals should not make them so in the reasoning. In any event, I do not believe that parties can be asked to pay for such exercises which make the opinions ever longer and more unmanageable or even muddled and do not do the international arbitration practice any favours. We are here primarily to solve a problem for the parties, not for others in the present or the future, and do not operate in this regard as ordinary judges.
21. In sum, the Secretariat is not the fourth member of ICSID Tribunals or ad hoc Committees and is not an interested party in any other way. It also does not have powers of scrutiny in the manner of the ICC Court. Although in practice it acts as appointing authority - in the case of ad hoc Committees of all Members - these Committees do not thereby become the extension of the Secretariat.
22. The potentially close interconnection in the present practices of the Secretariat between furthering its own role and its powers of appointment requires scrutiny and these practices themselves greater transparency. It lifts the question of the independence of ad hoc Committee Members and Arbitrators appointed by ICSID to the institutional level within ICSID. What is particularly necessary is that any semblance of collusion between the Secretariat and the Arbitrators or Committee Members it effectively appoints is avoided.
23. In short, it is urgent that the Secretariat clarifies its own role, which under the Convention, Administrative and Financial Regulations, and Arbitration Rules can be no more than one of support, respects and reinforces the privacy and secrecy of the deliberations of the ad hoc Committees or Tribunals, separates itself entirely and meticulously from the substance of the proceedings, appreciates that in legal matters wording is substance, organizes itself accordingly, and seeks financial support for this limited role only.
24. To conclude, the key issue in this annulment case was foremost the issue of independence of Arbitrators in the Second Award, but it became also an issue of the independence of the Members of the Second ad hoc Committee and, in that context, of the privacy and secrecy of their deliberations and drafts.
25. What hovers over all of this is the potentially pernicious impact of the desire for (re)appointment in many, not least for financial gain, in which not only withholding from the parties relevant information, as was the subject of the decision of this ad hoc Committee, but also incurring the favour of the Secretariat, may be important issues in terms of independence. Recently, the world has been rightly dismayed at the complete lack of judgment in grasping senior bankers. Whatever the rights or wrongs in this case, it may serve as a serious warning, also for ICSID arbitrators.
26. If the self-cleansing forces in the international arbitration system are no longer sufficiently strong, and if there is thus a need for closer supervision of Arbitrators and ad hoc Committee Members, this would not be the task of the ICSID Secretariat, which itself should be properly supervised, but must come from a treaty change probably involving the creation and operation of a specialised international court which might also function as ultimate supervisor and referee in international commercial arbitrations (including challenges and recognition issues) where similar needs may increasingly exist.
As a former Secretariat person myself (the Appellate Body), I'm going to stay out of this, but if anyone else has an opinion, feel free to post it in the comments.
