On 29 August 2012, an arbitral tribunal established under the International Centre for Settlement of Investment Disputes (“ICSID”) issued its Decision on Claimants’ proposal for disqualification of one of Venezuela’s expert witnesses, and request for inadmissibility of evidence (the “Decision”) in Flughafen Zürich A.G. and Gestión e Ingeniería IDC S.A. v. The Bolivarian Republic of Venezuela (“Flughafen”). The Tribunal rejected a challenge to Mr. Andrés Ricover, an expert presented by the Bolivarian Republic of Venezuela (“Venezuela”), and to the admissibility of an expert report co-authored by Ricover. Prior to becoming an expert for Venezuela, Ricover had offered his services to the Claimants. On that basis, Ricover had received sensitive information related to the Claimants’ strategy for the case.
The Decision is only available in Spanish as of the date of this alert.
Ricover was a member of the International Arbitration Practice Group of LECG (“LECG”), later Compass Lexecon (“Compass”). In 2010, Ricover contacted counsel for the Claimants to offer LECG’s services for this arbitration. As part of the expert selection process, counsel for the Claimants emailed certain documents with information that the Claimants later described as “internal and strategic”, notably a document titled “Business plan and updated damages calculation”. Ricover and other LECG members received this email on 17 June 2011.
Ricover alleged that he never opened, reviewed, analysed or considered any of these documents. He also alleged that he was not warned of their confidentiality.
The Claimants ultimately engaged a different company as experts. They informed Ricover of this decision on 25 July 2011. In March 2012 Ricover met with the Claimants, stating that as “mere collaborator” of Compass, he “had reached agreement” (“había consensuado”) on the possibility of offering his personal services as an expert for the case. The Decision does not identify the parties to such agreement. Ricover’s offer was not taken up.
According to Ricover, in June 2012 a Mr. Carlos Winograd, expert for Venezuela in Flughafen, invited Ricover to participate in preparing an expert report for Venezuela. Ricover accepted the invitation and thus became an expert for Venezuela. Venezuela filed the expert report later that month, on 28 June 2012.
Arguments of the Parties
Rule 19 of the ICSID Rules of Procedure for Arbitration Proceedings (the “Arbitration Rules”) states:
“The Tribunal shall make the orders required for the conduct of the proceeding.”
Rule 34(1) of Arbitration Rules states:
“The Tribunal shall be the judge of the admissibility of any evidence adduced and of its probative value.”
Article 9(2) of the IBA Rules on the Taking of Evidence in International Arbitration states in part:
“The Arbitral Tribunal shall, at the request of a Party or on its own motion, exclude from evidence or production any Document, statement, oral testimony or inspection for any of the following reasons: …
(b) legal impediment or privilege under the legal or ethical rules determined by the Arbitral Tribunal to be applicable; …
(g) considerations of procedural economy, proportionality, fairness or equality of the Parties that the Arbitral Tribunal determines to be compelling.”
In accordance with these provisions and the case-law of ICSID tribunals, the Claimants challenged Ricover and requested that the expert report prepared with Winograd be declared inadmissible. Alternatively, they requested that the Tribunal take Ricover’s actions into account when assessing the probative value of the expert report.
The Claimants argued that the information provided to Ricover was confidential, although they conceded that no express confidentiality agreement was in place. They cited to the “risk” that Ricover had used such information in preparing the expert report or that he had revealed it to Venezuela.
Venezuela stated that the Tribunal had no competence to order the recusal of an expert. Additionally, Venezuela argued that the Claimants sought to aggravate the dispute and hinder the proceedings with their challenge; it requested an order from the Tribunal that the Claimants refrain from doing so. Venezuela emphasised Ricover’s claim never to have considered or circulated the documents emailed to him.
Finally, Venezuela requested the production of the documents emailed to Ricover, arguing that such documents were decisive to establish the Tribunal’s jurisdiction and for quantum. The Claimants replied that such documents were “internal and strategic” and if produced would infringe upon their “right to present their case, the equality of the Parties and the integrity of the arbitral process”.
The Tribunal’s Decision on the Aggravation of the Dispute and the Hindrance of Proceedings
The Tribunal “underst[ood] well and share[d]” the Claimants’ worries about Ricover’s conduct, holding that their decision to introduce the challenge was “fully justified”. The Tribunal declined to issue the order requested by Venezuela.
The Tribunal’s Decision on its Competence to Recuse an Expert
The Tribunal asserted its competence under Rule 34(1) of the Arbitration Rules to declare (in)admissible the evidence submitted to it and to weigh the probative value of all such evidence.
The Tribunal’s Decision on the Challenge to Ricover and to the Admissibility of the Expert Report
The Tribunal presumed that the following facts were true:
– The information provided to Ricover was not marked as confidential;
– When providing this information (or before such time), the Claimants made no reservations as to: i) the confidentiality of that information, ii) any prohibition for Ricover to act in judicial or arbitral processes on the basis of the information received or iii) the “imposition of an exclusivity [sic]” on Ricover (this appears to mean that no reservation was made that Ricover would enter into an obligation of exclusivity by receiving the information sent);
– Ricover did not open the files containing the information sent to him. Therefore, he did not consider such information when preparing the expert report; and
– Ricover did not circulate those files to any third party.
On that basis, the Tribunal concluded that:
– The information sent to Ricover was not confidential or privileged; and
– Irrespective of the character of the information sent to him, Ricover had no actual knowledge (“efectivo conocimiento”) of that information.
Accordingly, the Tribunal held that there was no reason to disqualify Ricover as expert or to declare the expert report inadmissible. The tribunal indicated that it would revise its decision subsequently if the Claimants proved any of these facts to be false at a later stage of the proceedings.
The Tribunal did not pronounce on its “inherent faculty” under the Arbitration Rules to weigh the probative value of Ricover’s report.
The Tribunal’s Decision on Document Production
The Tribunal refused Venezuela’s request to order the production of the documents emailed to Ricover on 17 June 2011.
First, the Tribunal held that the Claimants had the burden to prove what these documents allegedly supported (e.g., the existence of an investment). Only the Claimants could decide whether to introduce such documents (at their peril).
Second, the Tribunal held that the correspondence between a lawyer and “a (potential) expert” is protected by “secreto profesional”. This phrase translates literally to “professional secret” or “secrecy” in English; in this specific context, it could translate to “legal professional privilege”. In order for lawyers to carry out their functions properly, the Tribunal deemed it essential that their “working papers”, drafts of pleadings and submissions (“escritos arbitrales”) and their correspondence with parties, experts and third parties be “considered as confidential and enjoy a heightened level of protection”.
This last point appears superficially to contradict the Tribunal’s decision on the challenge. However, this aspect of the Decision actually refers to legal professional privilege rather than to confidentiality.
The Tribunal would have allowed a challenge to an expert who used confidential information received from one party in order to testify on behalf of the other party. However, this was not successfully made out by the Claimants on the facts of this case. This decision should serve as an important reminder for counsel, who must keep in mind that non-lawyer experts do not necessarily operate under the same principles of confidentiality and conflict ethics as lawyers in most jurisdictions. The decision underscores the importance of putting in place clear obligations of confidentiality or exclusivity with experts before engaging in anything beyond preliminary discussions.