ACWL/MB/W/2015/4
26 May 2015
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THE EXTERNAL COUNSEL FUND
A NOTE BY THE MANAGEMENT BOARD
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ACWL/MB/W/2015/4
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I.
THE RIGHTS OF DEVELOPING COUNTRY MEMBERS AND LEASTDEVELOPED COUNTRIES
1.
Article 6.1 of the Agreement Establishing the ACWL (the "Agreement") provides that
each developing country Member1 is entitled to the services of the ACWL. Article 7 provides
that the least-developed countries2 shall likewise be accorded those services at their request.
2.
Each developing country Member and least-developed country is entitled to the
services of the ACWL (legal advice, support in WTO dispute settlement proceedings, and
training in WTO law). However, in certain situations, for ethical reasons, the ACWL is
prevented from providing direct support in a dispute or legal advice on a matter or issue to a
developing country Member or least-developed country. These situations are explained in
the following manner in the paper entitled The Allocation of Legal Services in Cases of
Conflict of Interest: Informal Note by the Executive Director (ACWL/GA/2002/20), which
was presented to the General Assembly in 2002:
The [ACWL] may be requested by two countries* entitled to its
services to provide legal advice or support on the same matter
or substantially related matters. This may happen because the
two countries are parties to the same dispute or seek legal
advice on the same measure. If two countries have divergent
interests, the [ACWL] faces a conflict of interest and must
therefore refuse to provide its services to one of the two
countries. (*footnote omitted)
II.
CONFLICTS OF INTEREST IN WTO DISPUTE SETTLEMENT
PROCEEDINGS
3.
Annex IV to the Agreement provides that when two parties to a dispute settlement
proceeding are entitled to the services of the ACWL and subcontracting external counsel
becomes necessary, the fees for both parties shall be increased by 20 percent. The underlying
premise of this provision is that if the ACWL cannot provide direct legal support to a
developing country Member or least-developed country in a dispute due to a conflict of
interest, the ACWL discharges its obligation to provide legal support to the other developing
country Member or least-developed country entitled to its services through the hiring of
external legal counsel.
4.
Accordingly, the very first annual regular budget of the ACWL for the year 2001
included a provision for "External Legal Expenses" with the following explanation:
The [ACWL] can subcontract in order to … avoid a conflict of
interest, if two or more Members are involved in the same case.
When a Member does not have priority use of the in-house
services of the [ACWL], it may request assistance from external
counsel.3
1
The term "developing country Member" includes a member with an economy in transition.
Unless the context otherwise requires, the term "least-developed countries" refers to those that are
WTO Members or are in the process of acceding to the WTO.
3
Budget for 2001, ACWL/GA/B/2001/1.
2
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5.
The ACWL's annual regular budgets for the years 2002-2004 similarly provided for
use of external legal counsel in cases of conflict.4 Starting in 2005, expenditure for external
legal counsel was treated separately from expenditure under the annual regular budget.
Under the Budget for 2005 (ACWL/MB/W/2004/15), on the basis of the recommendation of
the Management Board, the General Assembly established the revolving Fund for External
Counsel (the "External Counsel Fund") in the amount of CHF300,000 "to defray the costs of
hiring external legal counsel in the circumstances contemplated in Article IV of the
[Agreement Establishing the ACWL], i.e., when two Members or a Member and a leastdeveloped country seek the services of the [ACWL], and subcontracting external legal
counsel becomes necessary."
6.
The ACWL established a Roster of External Counsel consisting of highly-qualified
individuals or law firms that have agreed to provide assistance whereas conflict of interest
that prevents the ACWL from providing direct legal support in WTO dispute settlement
proceedings to a developing country Member or a least-developed country. To date, the
Roster and the External Counsel Fund have been used in six disputes.
III.
CONFLICTS OF INTEREST RELATING TO LEGAL ADVICE
7.
Conflicts of interest arise not only in WTO dispute settlement proceedings, but also
with respect to legal advice. This situation and how it has been dealt with by the ACWL is
summarized in the following manner in the paper entitled Confidentiality and Conflicts of
Interest: A Note Prepared by the Management Board (ACWL/MB/W/2014/10), which was
submitted to the General Assembly in December 2014:
20.
Since its inception in 2001, the ACWL has provided
over 1800 legal opinions on issues of WTO law. As noted
above, approximately 2-4 times per year, the ACWL must
decline requests for legal advice that would potentially put the
ACWL lawyers in a position of conflict of interest. This
potential conflict would arise where the ACWL has already
accepted a request for legal advice from another country
entitled to its services on the same measure. Shortly after its
inception, in order to comply with the requirements of legal
ethics, the ACWL adopted the practice generally used by
lawyers of advising the country that first sought its services: the
"first-come, first-served rule.* This is the only rule to govern
these situations that would be consistent with the ethical
obligations of the ACWL's lawyers and the effective operations
of the ACWL. (*footnote omitted)
8.
The policies and practices of the ACWL on conflicts of interest with respect to legal
advice have been codified under the Decision on Policies on Confidentiality and Conflicts of
Interest adopted by the Management Board (ACWL/MB/D/2014/4, hereinafter referred to as
the "Conflicts Rules"), which provides in relevant part as follows:
4
Budget for 2002, ACWL/GA/B/2002/1; Budget for 2003, ACWL/GA/B/2003/1; and Budget for
2004, ACWL/GA/B/2004/1.
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4.
In cases where the Executive Director considers that an
individual lawyer of the ACWL or the ACWL as a whole may
not be able to defend the interests of a Member or LDC seeking
legal advice to the best of that lawyer's or the ACWL's ability
because of a conflict of interest, the Executive Director may
recuse that lawyer from the matter or may decline on behalf of
the ACWL to provide legal advice to that Member or LDC in
that matter.
5.
Subject to the other policies referred to herein, the
ACWL shall respond to requests for legal advice on specific
measures on a first-come, first-served basis.
6.
The ACWL may decline to provide legal advice on a
specific measure to a Member or LDC where the ACWL has
previously provided legal advice to another Member or LDC on
that measure or on another measure that has a close nexus to the
specific measure at issue.
7.
The ACWL may decline to provide legal advice in
situations of "issues conflicts", where in the judgement of the
Executive Director, prior assistance provided by the ACWL to
another Member or LDC on a closely-related legal issue would
prevent the ACWL from defending to the best of its ability the
interests of the party seeking assistance.
9.
At present, the External Counsel Fund applies only where the ACWL has to decline to
provide legal advice in situations that result in dispute settlement proceedings. In cases of
conflicts that prevent the ACWL from providing advice in situations that do not result in
dispute settlement proceedings, however, the developing country Member or least-developed
country whose request for legal advice is declined has no other means of obtaining the
services to which it is entitled as an ACWL Member or least-developed country entitled to
the ACWL's services.
10.
In the view of the Management Board, this gives rise to a perception of unfairness in
access to the ACWL's services and is inconsistent with the ACWL's role in preventing
dispute settlement proceedings.
IV.
PROPOSAL ON ADDITIONAL USES FOR THE EXTERNAL COUNSEL
FUND
11.
To remedy this situation, the External Counsel Fund could be used not only to finance
the hiring of external legal counsel to provide support in WTO dispute settlement
proceedings, but also to provide legal advice in the situations of conflict of interest that do
not result in dispute settlement proceedings, when a developing country Member or leastdeveloped country would otherwise be deprived of the services to which it is entitled under
the Agreement.
12.
Using the External Counsel Fund in this manner would be unlikely to have any
material impact on the finances of the ACWL. At present, the revolving External Counsel
Fund is maintained at the level of CHF300,000. To date, this amount has been sufficient to
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cover expenditure in any given year (the maximum amount in a single year to date having
been CHF82,000). Moreover, during the period 2001-2014, expenditure for external legal
counsel was an average of CHF31,000 per annum.
13.
In addition, experience indicates that the ACWL has to decline to provide legal advice
on matters not relating to dispute settlement approximately 2-3 times per year. Even if the
country to whom assistance was declined had recourse to external counsel in every instance,
the total estimated expenditure would be CHF70,020 (three times the maximum amount of
CHF23,340 in each case, as explained below). In these circumstances, thus, there would be
no need to increase the level of the External Counsel Fund beyond its current level of
CHF300,000 per annum.
14.
Regulation 53 of the Financial Regulations provides that the Management Board
"shall establish separate rules for the subcontracting of external legal counsel." Those rules
are consolidated and set forth in the Decision on the Revised Rules for Support in WTO
Dispute Settlement Proceedings through External Legal Counsel adopted by the Management
Board (ACWL/MB/D/2007/8, hereintafter referred to as the "Dispute Support Rules"). As
stated in its title, those rules apply only to the hiring of external legal counsel in WTO dispute
settlement proceedings.
15.
The Management Board has the authority to amend the operational aspects of the
Dispute Support Rules. However, considering that the External Counsel Fund and the uses
thereof were prescribed by the General Assembly, expanding the use of the fund to include
the hiring of external legal counsel to provide legal advice in situations that do not result in
dispute settlement proceedings requires the approval of the General Assembly.
16.
The model contract annexed to the Dispute Support Rules provides that the number of
hours that the external legal counsel may charge shall not exceed the number of hours that the
ACWL would be entitled to charge for that service in accordance with the Decision on
Billing Policy and Time Budget adopted by the Management Board (ACWL/MB/D/2007/7,
hereinafter referred to as the "Time Budget Rules"). Under those rules, the maximum
number of hours for the "legal assessment of the case" is 60 hours. The number of hours that
the external legal counsel may charge for legal advice could be that which is agreed upon
between the Executive Director and the external legal counsel, subject by analogy to the
maximum of a total of 60 hours. Since legal advice is normally free of charge, the fees for
external legal counsel providing legal advice will have to be borne exclusively by the ACWL.
However, should the matter subsequently evolve into a WTO dispute, the hours billed by
external legal counsel for legal advice could be charged to the developing country Member or
least-developed country concerned, in accordance with the Time Budget Rules and the
Dispute Support Rules.
17.
Taking the foregoing into account, the Management Board recommends that the
General Assembly adopt a decision authorizing the use of the External Counsel Fund to
subcontract external legal counsel to provide legal advice to developing country Members
and least-developed countries in cases of conflict of interest in situations that do not result in
WTO dispute settlement proceedings.
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