French law's liberal stance towards international arbitration comes at the cost of an extremely strict approach in matters involving arbitrators' independence and impartiality. Put simply, arbitrators must not merely be independent and impartial, they must also appear to be so. In addition, arbitrators bear an ongoing duty of disclosure that requires them – from the moment that they are considered to be sitting as arbitrators until the end of the proceedings – to reveal to the parties all circumstances that may give rise to reasonable doubt regarding their independence or impartiality.(1) This rule is embodied in Article 1456, Paragraph 2 of the Code of Civil Procedure.
French courts have consistently reminded the arbitration community that they will not enter into subtle factual inquiry of the circumstances, and they have become increasingly severe in their approach to an arbitrator's duty to disclose – in particular, when dealing with matters involving arbitrators who do not practise individually, but are members of large multinational legal practices.
Following the decisions rendered in the landmark SA J&P Avax v Société Tecnimont SpA judicial saga,(2) the ruling in SA Auto Guadeloupe Investissements v Columbus Acquisitions Inc provides another example of how frustrating this issue can be. There are circumstances where an arbitrator who also works in a large firm simply cannot ascertain whether any of his or her colleagues around the world have worked or are working – in wholly unrelated matters – for clients that have a business interest relating to one of the parties involved in the arbitration. Whereas some conflicts of interest are easy to identify and are routinely caught by firms, other circumstances may be difficult to apprehend – in particular, where the parties themselves did not proactively disclose their respective holdings and affiliates. Leaving the whole burden of disclosure (and the related investigation) exclusively on the shoulders of the arbitrator, French courts carry out a monolithic test of apparent independence that they refuse to adjust to the particular circumstances. The courts are insensitive to the fact that an arbitrator may not have had any personal knowledge of a professional relationship between another member of his or her firm and the third party that arguably had a business interest relating to a party to the arbitration.
Columbus illustrates the extreme results that this test, as presently applied, can yield. The sole arbitrator disclosed early on that his firm had had a relationship with one of the parties' parent company, but stressed that the relationship – which had been conducted from a different office – was at that time inactive. The arbitrator also stated that he had had no involvement with the parent company nor any knowledge of its affairs. Both parties consented to his appointment. The criticism arose only after the arbitrator had made a number of interim awards, on the grounds that he had failed to disclose that at some point in the course of the arbitral proceedings the client relationship had resumed – a development that the arbitrator himself had ignored.
On December 16 2015 the Supreme Court upheld a Paris Court of Appeal decision that had annulled the order granting leave for the enforcement of an International Centre for Dispute Resolution (ICDR) award rendered in Barbados.(3) The court found that, regardless of his previous disclosure, the arbitrator remained bound to disclose that the firm at which he worked had received new instructions from the same client, and that failure to do so could create reasonable doubt in the mind of the other party to the arbitration.(4)
The underlying dispute involved a mundane case of a breach of negotiations. French company Auto-Guadeloupe Investissement (AGI) held 60% of Global Caribbean Fiber SA (GCF) and US company Caribbean Fiber Holdings LP (CFH) – owned by Leucadia National Corporation – held 40%. In 2008 AGI and CFH entered into negotiations for the transfer of the entirety of GCF's capital to Columbus Acquisitions Inc and Columbus Holdings France SAS (collectively, 'Columbus'). A first memorandum of terms fixed the end of negotiations for December 31 2008. This schedule was not complied with, so a renewed memorandum of terms containing an ICDR arbitration agreement was signed on March 3 2009.(5) On May 20 2009 AGI announced that it no longer wished to complete the transaction. Columbus initiated arbitral proceedings on July 10 2009, seeking to enforce the transfer agreement and obtain compensation. CFH joined the action and additionally asked for punitive damages.
The sole arbitrator conducted conflict searches of the names of the parties to the arbitration – Columbus Acquisitions and AGI – and reported that no conflicts of interest had been identified. On reading the request for arbitration as remitted to him by the arbitral institution, he identified other related entities and performed a new conflict search that revealed that the firm he worked for had advised one of the related groups of companies – Leucadia – out of another office and in totally unrelated matters. He stressed that he had no personal involvement in or knowledge of the work carried out for Leucadia, and that these circumstances would not affect his independence or impartiality. The parties did not make any objections and the arbitrator accepted his appointment on September 15 2009. Between September 2009 and March 2011, various steps of the arbitral proceedings took place. This resulted in two interim awards being rendered: one on March 8 2010 denying Columbus the right to punitive damages; and one on March 27 2011 finding for Columbus on AGI's liability, but denying Columbus's claims for forced transfer of the shares.
Following this award, AGI challenged the arbitrator's jurisdiction to render damages. Both the arbitrator, in an award of July 19 2011, and the Barbadian courts denied this challenge. AGI then made various court applications seeking to challenge the arbitrator, set aside the awards and obtain a refund of the arbitrator's fees.
On June 20 2013 leave to enforce was granted for the March 27 2011 award by the Paris Court of First Instance. AGI appealed, invoking – among other things – the irregularity of the arbitral tribunal's composition and a resulting violation of French international public policy.
AGI argued that the arbitrator had failed to disclose the relationship that existed between the law firm in which he was a partner and Leucadia, CFH's parent company. AGI had been made aware through a publication on the arbitrator's firm's website in December 2010 that a three-partner team from another office of that firm had assisted Leucadia in a corporate matter during the arbitration. AGI argued that by failing to disclose this circumstance, the arbitrator had breached his continuing duty of disclosure.
Columbus stressed that the litigious circumstances had been disclosed by the arbitrator and were also public knowledge as they had been published on the firm's website. In his declaration of independence the arbitrator, who was based in Vancouver, mentioned that "a partner in [his] firm's Toronto office has represented Leucadia National Corporation… over a number of years", but that he understood that "at present there are no matters in respect of which [his] firm is currently providing advice to Leucadia National Corporation". This declaration was made in 2009 and was accepted by AGI.
In its October 14 2014 decision(6) the Paris Court of Appeal stressed that if parties are expected to undertake due diligence by inspecting publicly available and easily accessible information before arbitral proceedings begin, they cannot reasonably be required to continue to pursue their inquiries and undertake a 'systematic review' of such sources once the proceedings have begun.(7)
The court further found that – even if it were shown that the firm had received only minor remuneration for its assistance – the size of the deal, the number of lawyers involved and the subsequent publicity given to the work by the firm demonstrated the significance of the mandate for the firm. Those circumstances, although unknown by the arbitrator at the time of his appointment, could raise reasonable doubt for AGI as to his independence and impartiality. Based on this reasoning, the Paris Court of Appeal quashed the order granting leave to enforce the award.
Columbus lodged an appeal before the Supreme Court. Among other claims, it argued that the Paris Court of Appeal had failed to demonstrate concretely that the disputed circumstances could raise reasonable doubt for AGI as to the independence and impartiality of the arbitrator.
To support its contention, Columbus pointed out that the arbitrator had disclosed that his firm "has represented Leucadia National Corporation… over a number of years". Columbus contended that since AGI had known that Leucadia was a client of the arbitrator's firm and had not asked for the arbitrator's recusal in light of such circumstances, the mere existence of an ongoing mandate for Leucadia was insufficient to raise reasonable doubt for AGI. Columbus also insisted that the arbitrator had faithfully inquired into the existence of any conflicts of interest and ignored the disputed circumstances. Consequently, his judgement could not be affected by a situation of which he was legitimately unaware.
On December 16 2015 the Supreme Court confirmed the Paris Court of Appeal's ruling.(8) It held that the appeal court was correct in ruling that the litigious circumstances unknown to AGI were enough to create reasonable doubt as to the independence and impartiality of the arbitrator.
The Supreme Court stressed that the litigious information was unknown by AGI before the arbitration proceedings began. According to the court, AGI was under no obligation to further investigate the issue of the independence and impartiality of the arbitrator during the arbitration proceedings because of the statements that the arbitrator had made in September 2009, and because despite its significant nature if one considers the publicity that his firm gave it, he had not disclosed the subsequent mandate his firm received from Leucadia.(9)
Under French law, the requirement that an arbitrator be independent and impartial is of paramount importance. It is derived from the notion of due process and is considered by the courts to be part of the "essence of the arbitral function itself".(10)
The requirement of independence and impartiality has been expressly codified in Article 1456, Paragraph 2 of the Code of Civil Procedure, which states that "before accepting a mandate, an arbitrator shall disclose any circumstance that may affect his or her independence or impartiality. He or she also shall disclose promptly any such circumstance that may arise after accepting the mandate".
Pursuant to this provision, disclosure constitutes the cornerstone of an arbitrator's duty to remain independent and impartial. Arbitrators must disclose any circumstance that could affect their judgement, so as to empower the parties to challenge their appointment in light of all relevant circumstances at the outset of the arbitration proceedings. The text also clearly sets out that disclosure is a continuing duty that must be fulfilled throughout the arbitration.(11) Hence, if new circumstances arise later in the proceedings that were non-existent at the time the tribunal was constituted – but which could trigger such doubt – they should immediately be disclosed to the parties and the other arbitrators.
Failure by an arbitrator to make a complete disclosure may result in the annulment of the award if it was rendered in France or in the annulment of the order granting leave to enforce the award if it was rendered abroad.(12) Further, an unjustified refusal by an arbitrator to make any disclosure with regard to his or her independence and impartiality may lead the courts to set aside any award that he or she renders.(13)
In this regard, the lack of impartiality of only one member of a three-arbitrator tribunal is enough for the courts to set aside the award rendered by the tribunal or refuse its enforcement in France.(14)
Scope of disclosure and burden of proof
When it comes to the adequacy of the scope of the arbitrator's disclosure, a subjective test is applied – which focuses on the impression created in the parties' minds – rather than an objective test – which would seek to determine whether the arbitrator was, as a matter of fact, independent and impartial.
In this respect, French courts systematically set aside awards where arbitrators have failed to disclose information that was "susceptible to create a reasonable doubt in the parties' minds as to the arbitrators' independence and impartiality", even though the underlying circumstance may not have justified a challenge if it had been properly disclosed.
Although mere doubt is sufficient for an award to be set aside or for its enforcement to be refused in France, the claimant still bears the burden of proving that the circumstances it invokes have created such a doubt in its mind. The courts must then scrutinise the grounds invoked.
In the landmark decision in Tesco v Neoelectra Group, the Supreme Court overturned a ruling by the Paris Court of Appeal on the ground that it did not justify why the circumstances that the arbitrator had failed to disclose were likely to create reasonable doubt in the parties' minds, with the appeal court therefore failing to enable the Supreme Court to ensure the same.(15) The Supreme Court remanded the case to the Lyon Court of Appeal. In this case, an associate of a large firm was acting as counsel for a client in her personal capacity (and not as a member of the firm employing her). She appointed a professor of law as co-arbitrator who did not disclose that:
- he had acted as of counsel for the firm that had employed the associate until nine years prior;
- he had provided legal advice to the firm on two or three occasions since then; and
- he had organised a lecture on the firm's premises a few days before his appointment.
The Lyon Court of Appeal decided that the arbitrator was not bound to disclose these circumstances, as they could not raise doubt over his independence or impartiality in the parties' minds.(16)
As highlighted in Tesco, as part of their duty to disclose arbitrators must disclose existing relationships with the parties and their counsel in the arbitration proceedings.(17) Additionally, several decisions have made clear that courts take into account not only the relationship between the arbitrators themselves and the parties' counsel and their firms, but also the relationship between the latter and the arbitrator's firm as a whole (even when the arbitrator is not part of the partnership).(18) This standard is particularly burdensome for arbitrators practising in large firms, as it invites them to proactively investigate any link that their firm's attorneys may have with one of the parties to the arbitration proceedings (or with related entities, such as their parent companies).
Reasonable doubt assessment
In assessing whether the circumstances are likely to create reasonable doubt in the parties' minds, French courts tend to examine the nature and frequency of the relationship between the arbitrators and the parties and their counsel.
Courts have found the following to be insufficient for creating doubt in parties' minds as to their arbitrator's independence and impartiality:
- failure of an arbitrator to disclose that he was friends with one of the parties' counsel on Facebook;(19)
- failure of an arbitrator to disclose that he had previously been appointed on one occasion as an arbitrator by one of the parties or its counsel;(20) and
- failure of an an arbitrator to disclose that he had attended a conference with one of the parties or its counsel.(21)
In this regard, courts pay particular attention as to whether a stream of business exists between the arbitrator and a party to the arbitration (or its counsel), and whether the arbitrator has declared the existence of such relationship. In order to determine whether a stream of business is characterised, courts focus on whether a client relationship exists (ie, where the arbitrator or his or her firm is given regular mandates as an attorney or arbitrator by a party or its counsel).(22)
The Paris Court of Appeal has also found the following to be sufficient for creating doubt in parties' minds as to their arbitrator's independence and impartiality:
- failure of an arbitrator to disclose that he was one of the parties' counsel during the arbitration proceedings;(23)
- failure of an arbitrator to disclose that he had applied for the registration of a patent and founded a company with one of the parties;(24) and
- failure of an arbitrator to disclose that he was married to the mother of the counsel to one of the parties.(25)
The Paris Court of Appeal therefore held that the awards so rendered should be set aside.
Interestingly, in an important decision, the court relied on the behaviour of an arbitrator and one of the parties during the course of the arbitration proceeding to find that such behaviour revealed the existence of a pre-existing relationship that could raise legitimate doubt as to the tribunal's independence, such that the award should be set aside.(26)
Disclosure of 'overt circumstances'
It must nonetheless be stressed that, even though the scope of the arbitrator's duty of disclosure is broad, constant case law supports the proposition that such duty does not imply the disclosure of 'overt circumstances' (ie, circumstances that are known or should be known by the parties).(27) Accordingly, French courts tend to reject late challenges brought on the basis of an arbitrator's incomplete disclosure where the claimant was aware of the undisclosed circumstances(28) or where such undisclosed circumstances were easily accessible on the internet or in newspapers.(29) Consequently, the parties bear the burden of investigating publicly accessible resources and raising their concerns at the outset of the proceedings, as they will then be barred from challenging the arbitrator's appointment on such grounds at a later stage.
However, the Supreme Court has been increasingly severe in its approach to an arbitrator's duty to disclose and recent decisions tend to have made the rule nuanced.
In the Société Dukan de Nitya v Société VR Services decision of December 18 2014, the Supreme Court had to decide whether an arbitrator's omission in disclosing a close professional relationship with the other party's counsel – where the arbitrator had been chosen from a shortlist of four presidents of various professional organisations as stipulated in the relevant arbitration agreement – could create reasonable doubt in the parties' minds as to the impartiality and independence of the arbitrator. Despite the fact that such information was apprehensible and could be publicly accessed on the professional organisation's website before the arbitration commenced, the Supreme Court held that:
"the arbitrator's declaration of independence was deliberately truncated and reductive, and no specific circumstance justified, in the eyes of the parties, questioning the elements disclosed within the declaration, when nothing, in light of the circumstances disclosed, commended them to proceed with particular investigations."(30)
The Supreme Court therefore confirmed the Paris Court of Appeal decision that had set aside the two awards at stake,(31) holding that the undisclosed business relationship between the arbitrator and the other party's attorney could create reasonable doubt with regard to the impartiality and independence of the arbitrator.(32)
In Société Dukan de Nitya the Supreme Court discharged the parties from any obligation to investigate the arbitrator's independence – even where information putting his independence and impartiality into question was publicly available before the tribunal was constituted. The court further held that parties are not expected to doubt the sincerity of their arbitrator's declaration of independence, so long as it does not bring any potentially litigious circumstance to their attention. In so ruling, the court initiated an important shift, compelling arbitrators to disclose any circumstance that they believe could create reasonable doubt in the parties' minds, regardless of its overt character.
In Columbus the Supreme Court appears to temper the harsh standard it had coined in Société Dukan de Nitya. However, it remains merciless to an arbitrator's incomplete disclosure.
The Supreme Court stressed that the litigious information at stake was inapprehensible to AGI before the arbitration proceedings had begun. The court then held that AGI was under no obligation to further investigate the issue of the arbitrator's independence and impartiality during the arbitration proceedings in light of the content of his declaration of independence.
The court, which followed the Paris Court of Appeal's reasoning,(33) therefore established a new distinction between the nature of the respective duties of the parties and that of the arbitrator.
Before arbitration proceedings commence, parties are expected to undertake due diligence based on publicly accessible information and the arbitrator is under no duty to reveal 'overt circumstances'.(34) There is no general requirement that the parties disclose their shareholding and other conflict-sensitive relationships with third parties from whom the arbitrators and their respective organisations are expected to be independent. While it is not suggested that arbitral institutions or lawmakers impose such an obligation on the parties in a systematic way, it may be useful for parties to potential arbitrations to disclose such a relationship at the outset.
Once proceedings have started, the parties are no longer expected to carry out background searches on the arbitrator – even if information is public and easily accessible. Additionally, the court confirmed that the arbitrator's good faith and honest ignorance of the litigious circumstances were irrelevant, and that he should have continued to undertake conflict checks within his firm.(35)
This rule implies an obligation on arbitrators to keep themselves informed of the current affairs of their firms. This may not be problematic for arbitrators who operate in professional environments of modest size or even for those who are members of large yet fully integrated professional organisations where dedicated teams and information systems provide arbitrators with automated alerts that can capture all conflict-sensitive information pertaining to any identified interests. However, it is possible that many large but only loosely integrated firms do not offer that service, thereby exposing arbitrators to the risk of being unable to efficiently discharge the duties put on them.
In Columbus the fact that Leucadia had been a regular client of the arbitrator's firm was not an issue, as it had been proactively disclosed by the arbitrator at the outset of the proceedings and accepted by all parties and the ICDR. The arbitrator had disclosed that his firm had "represented Leucadia National Corporation…over a number of years". However, the arbitrator's firm was not carrying out any work for that client at the time of the initial disclosure. The fact that this relationship gave rise to new instructions while the arbitration was ongoing is not, in and of itself, particularly surprising to anyone familiar with how large firms operate.
One may think that by waiving its right to challenge the arbitrator on the ground that his firm had had a regular relationship with Leucadia, AGI also accepted or was deemed to have accepted the fact that the relationship might have become active again during or after the arbitration. This view, while tempting from the arbitrator's perspective, may be more difficult to accept when considered from that of arbitration users. The difficulty is made more acute given the reticence in many jurisdictions, including France,(36) to accept advance waivers for future causes of challenge – including the resumption of a dormant client relationship.
Conversely, one could consider that unless specified otherwise, nothing in the disclosure about a past relationship could be interpreted as meaning that any given past relationship was expected to become active again or that the firm would accept future instructions from the previous client. The Paris Court of Appeal and the Supreme Court took the latter view. The Supreme Court justified its finding that the undisclosed circumstance could create doubt in the parties' minds by stressing that the new mandate was "manifestly important for the [arbitrator's] law firm, as evidenced by the broad publicity that the firm gave it".
In effect, the Columbus decision means that arbitrators who practise in large firms must ensure that any past client relationship, even if disclosed, will be put on hold for an indefinite period of time – presumably for as long as annulment or liability applications can be brought before courts. It also means that if their firm decides to take on future business for a previous client, arbitrators will have no other choice but to inform the parties and the arbitral institution swiftly. In the event of an objection, arbitrators must determine (irrespective of the possible arbitral institution's position) whether they should step down.
Columbus produces harsh consequences for arbitrators. Beyond championing a legitimate control of independence and impartiality, it further focuses on apparent independence in an abstract manner that has little regard for factual circumstances, let alone good faith of the arbitrator or the tactical motives of the party behind the application.
The policy that it conveys reflects France's consideration for the promotion of arbitration and the preservation of its essence as an efficient and impartial mechanism to settle international business disputes. However, the same policy could perhaps be achieved while allowing for a little more consideration of factual circumstances and the respective good faith of the arbitrators and the parties. It may be suggested that the development of tactical applications for annulment or denial of enforcement – or worse, for negligence claims against arbitrators – may counter the promotion of international arbitration.
For further information on this topic please contact Elie Kleiman or Yann Dehaudt-Delville at Freshfields Bruckhaus Deringer by telephone (+33 1 44 56 44 56) or email (firstname.lastname@example.org or email@example.com). The Freshfields Bruckhaus Deringer LLP website can be accessed at www.freshfields.com.
(1) See, for example, Cass Civ 1, March 16 1999, Etat du Qatar v Société Creighton, 96-12748, Rev Arb 1999, 308; CA Paris, September 9 2010, Consorts Allaire v SAS SGS Holding France, Rev Arb 2011, 686; CA Paris, March 10 2011, Société Nykcool AB v Société Dole France et al, 09/21413, Rev Arb 2011, 732; and Cass Civ 1, October 10 2012, Société Tesco v Société Neoelectra Group, 11-20299.
(2) CA Paris, February 12 2009, SA J&P Avax v Société Tecnimont SpA, Rev Arb 2009, 186; Cass Civ 1, November 4 2010, Société Tecnimont SpA v J&P Avax SA, 09-12.716; CA Reims, November 2 2011, SA J&P Avax v Société Tecnimont SpA, 10/02888; and Cass Civ 1, June 25 2014, Société Tecnimont SpA v J&P Avax SA, 11-26529.
(3) Cass Civ 1, December 16 2015, SA Auto Guadeloupe Investissements v Columbus Acquisitions Inc et al, 14/26279; see A Ross and T Jones, "Alvarez conflict of interest ruling upheld in France", Global Arbitration Review, January 29 2016.
(4) CA Paris, October 14 2014, SA Auto Guadeloupe Investissements v Columbus Acquisitions Inc et al, 13/13459; see D Cohen, "Encore l'indépendance de l'arbitre et sort de l'exequatur d'une sentence", Paris Journal of International Arbitration, 2014, 795; E Kleiman and Y Dehaudt-Delville, "Challenges of arbitrators: clarification on timeframe and standard of review", International Law Office, December 4 2014; and R Woolley, "Alvarez award gets short shrift in Paris", Global Arbitration Review, October 23 2014.
(5) The ICDR is related to the American Arbitration Association.
(6) CA Paris, October 14 2014, SA Auto Guadeloupe Investissements v Columbus Acquisitions Inc et al, 13/13459.
(8) Cass Civ 1, December 16 2015, SA Auto Guadeloupe Investissements v Columbus Acquisitions Inc et al, 14-26279.
(10) Cass Civ 1, March 16 1999, Etat du Qatar v Société Creighton, 96-12748, Rev Arb 1999, 308; CA Paris, November 28 2002, Voith Turbo GmbH AG et al v Société Nationale des Chemins de Fer Tunisiens, Rev Arb 2003, 445; CA Paris, April 2 2003, Société Fremarc v ITM Entreprises, Rev Arb 2003, 1231; CA Paris, February 12 2009, SA J&P Avax v Société Tecnimont SpA, Rev Arb 2009, 186; CA Paris, September 9 2010, Consorts Allaire v SAS SGS Holding France, Rev Arb 2011, 686; CA Paris, March 10 2011, Société Nykcool AB v Société Dole France et al, 09/21413, Rev Arb 2011, 732; and CA Paris, April 1 2014, Société Novolipetski Mettalurguicheski Kombinat v Mr M, 12/15479. See also CA Paris, March 23 1995, Société Maec et al v P Mumbach, Rev Arb 1996, 446 (confirmed by Cass Civ 2, May 27 1998, 95-16844); and CA Paris, November 20 1997, Société 3R v Société Phénix Richelieu, Rev Arb 1999, 329.
(11) See, for example, CA Reims, November 2 2011, SA J&P Avax v Société Tecnimont SpA, 10/02888 ("the duty of disclosure that lies with the arbitrator… is effective throughout the entirety of the arbitration proceedings until the arbitrator's mission comes to an end"); and CA Paris, February 12 2009, SA J&P Avax v Société Tecnimont SpA, Rev Arb 2009, 186 ("as the relationship of trust between the arbitrator and the parties must be preserved continuously, the latter must be informed throughout the entirety of the arbitration proceedings of the relationships that could, in their minds, affect the arbitrator's judgement").
(12) Pursuant to Article 1520(2) of the Code of Civil Procedure, an award may be set aside where "the arbitral tribunal was not properly constituted".
(13) CA Paris, March 10 2011, Société Nykcool AB v Société Dole France et al, 09/21413, Rev Arb 2011 (setting aside an award where the arbitrators had refused to provide a declaration of independence and observing that one of the arbitrators was involved in other arbitration proceedings between the same parties).
(14) CA Paris, February 21 2012, Etat du Cameroun v SPRL Projet Pilote Garoube, 10/06953 ("the procedure was brought before a panel of three arbitrators, and the arbitrator whose partiality is suspected could have used his influence for both the conditions under which the procedure progressed and the opinion of his colleagues while deliberating… therefore, the partial award shall be set aside as the arbitral tribunal was not properly constituted") (confirmed by Cass Civ 1, March 13 2013, Etat du Cameroun v SPRL Projet Pilote Garoube, 12-16944).
(15) Cass Civ 1, October 10 2012, Société Tesco v Société Neoelectra Group, 11-20.299. In some cases, where the arbitrator or a party alleges that it is not in a position to disclose certain circumstances, the court – after reviewing the evidence produced by the parties – appointed an expert in order to review these circumstances, to allow the court to establish the nature of the relationship between the arbitrator and such party (CA Paris, May 16 2002, STPIF v SB Ballestrero, Rev Arb 2003, 1231; and CA Paris, April 2 2003, Fremarc c ITM Entreprises, Rev Arb 2003, 1231).
(16) CA Lyon, March 11 2014, Société Tesco v Société Neoelectra Group, 13/00447.
(17) See also CA Paris, September 9 2010, Consorts Allaire v SAS SGS Holding France, Rev Arb 2011, 686 ("the lack of independence may result from the relationship entertained by an arbitrator with one of the parties in the instant case, but also with its counsel, where the relationship is self-interested and not merely occasional").
(18) CA Paris, February 12 2009, SA J&P Avax v Société Tecnimont SpA, Rev Arb 2009, 186; CA Reims, November 2 2011, SA J&P Avax v Société Tecnimont SpA, 10/02888 (the court expressly stated that "the arbitrator had to disclose potential conflicts that would affect him personally or his firm, regardless of his degree of partnership within the firm"); and Cass Civ 1, December 16 2015, SA Auto Guadeloupe Investissements v Columbus Acquisitions Inc et al, 14-26279 (and CA Paris, October 14 2014, 13/13459).
(19) CA Paris, March 11 2011, Société Tesco v Société Neoelectra Group, 09/28537 and 09/28540; CA Lyon, March 11 2014, Société Tesco v Société Neoelectra Group, 13/00447.
(20) Cass Civ 1, March 16 1999, Etat du Qatar v Société Creighton, 96-12748, Rev Arb 1999, 308 (refusing to set aside an award where an arbitrator did not disclose that he had been appointed by the defendant in another dispute related to the case at stake).
(21) Cass Civ 1, July 4 2012, Société CSF v Société EDJUVE, 11-19624 (finding that the arbitrator's participation in a conference with one of the parties was unlikely to raise doubt about his independence or impartiality); CA Paris, October 15 2013, FC Nantes v Fidelidade Companhia de Seguros, 13/14076 (finding that the attendance of two arbitrators at a conference with the party's counsel was unlikely to raise doubt about his independence or impartiality); and CA Paris, October 29 2013, X and SAS Damilo v Société Norma, 12/05854 (confirmed by Cass Civ 1, April 1 2015, 14-13908). Similarly, the failure of two members of a three-arbitrator tribunal to disclose that they were also members of the same scientific committee of a legal journal or attended conferences together did not render them incapable of exerting independent and impartial judgement (Cass Civ 1, January 29 2002, SGS Holding v Mr Y, 00-12173 and 00-17587; CA Paris, October 15 2013, FC Nantes v Fidelidade Companhia de Seguros, 13/14076; and CA Reims, July 1 2011, SA Sorbrior et al v SAS ITM Entreprises et al, Rev Arb 2011, 761).
(22) Cass Civ 1, October 20 2010, Société Somoclest v Société DV Construction, 09-68997 (the arbitrator declared that he had been appointed by the same party on a regular basis, but had failed to disclose that he had been appointed 51 times by companies belonging to this party's group of companies); and CA Reims, January 31 2012, Mr and Ms X v SAS Prodim et al, 10/03288 (the arbitrator declared that he had been appointed by the same party on several occasions, but failed to disclose that he had been appointed 18 times by this party before he rendered the award in 2002 and was appointed another 16 times until the decision of the Reims Court of Appeal was rendered in 2012); see also CA Paris, September 9 2010, Consorts Allaire v SAS SGS Holding France, Rev Arb 2011, 686; CA Paris, February 12 2009, SA J&P Avax v Société Tecnimont SpA, Rev Arb 2009, 186; and CA Reims, November 2 2011, SA J&P Avax v Société Tecnimont SpA, 10/02888 (in this case, the arbitrator had initially failed to disclose that the law firm he was associated with as an of counsel had advised and represented one of the parties on several occasions).
(23) CA Paris, November 20 1997, Société 3R v Société Phénix Richelieu, Rev Arb 1999, 329. Each 'wing arbitrator' was apparently also acting as counsel for the party that had appointed them, but one had failed to disclose this dual capacity.
(24) CA Paris, March 23 1995, Société Maec et al v P Mumbach, Rev Arb 1996, 446 (confirmed by Cass Civ 2, May 27 1998, 95-16844).
(25) CA Paris, January 12 1999, Société Milan Presse v Société Média Sud Communication, Rev Arb 1999, 381.
(26) In a case between SPRL Projet Pilote Garoube and the State of Cameroon, an arbitral tribunal rendered a partial award and an addendum to this award. After the awards were rendered, the claimant challenged the chair of the arbitral tribunal before the International Chamber of Commerce (ICC) and sought to stay the payment of its share of the advance on costs. The ICC invited the arbitrators to formulate their observations on this claim. The arbitrator appointed by the claimant strongly supported the claimant's argument that the claimant's payment of its share of the advance on costs should be stayed while suggesting that the defendant had to pay its own share, stating the facts in a grossly biased manner. The claimant then hired new counsel, which led to the recusal of the claimant-appointed arbitrator by the ICC at the request of the defendant due to his relationship with this claimant's new counsel. The claimant, who had systematically challenged the calls for an advance on costs during the arbitration proceedings, suddenly applied for the arbitration fees to be raised as from the date of the partial award to the date of the recusal of the arbitrator it had formerly appointed. The defendant applied to set aside the award based on the tribunal's lack of independence and impartiality. The Paris Court of Appeal, observing that the claimant-appointed arbitrator had adopted a biased position and noting that the claimant's application for a raise of the arbitration fees up to the date of the claimant-appointed arbitrator's recusal was aimed only at increasing the latter's remuneration, set aside the award (CA Paris, February 21 2012, Etat du Cameroun v SPRL Projet Pilote Garoube, 10/06953; and Cass Civ 1, March 13 2013, Etat du Cameroun v SPRL Projet Pilote Garoube, 12-16944).
(27) In this respect, French courts consistently hold that an arbitrator's duty to disclose must be considered in light of both the overt (in French, 'notoire') character of the litigious circumstances and their influence on the arbitrator's judgement. See, for example, CA Paris, January 12 1999, Société Milan Presse v Société Média Sud Communication, Rev Arb 1999, 381; Cass Civ 2, March 25 1999, Société Siab et al v Société Valmont et al, Rev Arb 1999, 319; CA Paris, March 23 1995, Société Maec et al v P Mumbach, Rev Arb 1996, 446 (confirmed by Cass Civ 2, May 27 1998, 95-16844); CA Paris, September 9 2010, Consorts Allaire v SAS SGS Holding France, Rev Arb 2011, 686; CA Paris, November 28 2002, Voith Turbo GmbH AG et al v Société Nationale des Chemins de Fer Tunisiens, Rev Arb 2003, 445; CA Paris, April 2 2003, Société Fremarc v ITM Entreprises, Rev Arb 2003, 1231; CA Reims, July 1 2011, SA Sorbrior et al v SAS ITM Entreprises et al, Rev Arb 2011, 761; CA Paris, April 1 2014, Société Novolipetski Mettalurguicheski Kombinat v Mr M, 12/15479; and CA Paris, October 14 2014, SA Auto Guadeloupe Investissements v Columbus Acquisitions Inc et al, 13/13459.
(28) CA Paris, July 8 1994, Société Siab et al C Société Valmont et al, Rev Arb 1994, 428 (and Cass Civ 2, March 25 1999, Rev Arb 1999, 319); CA Paris, November 28 2002, Voith Turbo GmbH AG et al v Société Nationale des Chemins de Fer Tunisiens, Rev Arb 2003, 445; CA Colmar, February 8 2011, Consorts X v Société Système U Est, Rev Arb 2011, 724 and Cass Civ 1, February 1 2012, Consorts X v Société Système U Est, 11-15346 (the judge, acting in support of the ongoing arbitration proceedings, refused to uphold the recusal of an arbitrator based on the claimant's knowledge of the relationship between the arbitrator, the defendant and the defendant's counsel); Cass Civ 2, November 22 2001, Société Constructions Métalliques de Chevilly v Société Quille, 99-15163 (rejecting the claimant's application to set aside the award on the ground that the arbitrator, a former employee of the defendant, lacked impartiality. The court noted that the claimant had been aware of such circumstances when signing the arbitration agreement); and CA Paris, January 14 2014, SAS Cegelec v SAS Siemens, 12/15140 (refusing to set aside the award, holding in particular that the circumstances at stake were overt and that the claimant did not substantiate its claim that it had discovered them after the arbitration proceedings had ended).
(29) CA Paris, October 15 2013, SARL Plaisir Sélection GmbH et SA Plaisir Selection Japan v SNC Organisation Intra-groupe des achats, 12/05143; CA Paris, October 29 2013, X and SAS Damilo v Société Norma, 12/05854 (confirmed by Cass Civ 1, April 1 2015, 14-13908); and CA Paris, April 1 2014, Société Novolipetski Mettalurguicheski Kombinat v Mr M, 12/15479.
(30) Cass Civ 1, December 18 2014, Société Dukan de Nitya v Société VR Services, 14-11085.
(31) CA Paris, October 29 2013, Société Dukan de Nitya v Société VR Services, 12/17423.
(32) Cass Civ 1, December 18 2014, Société Dukan de Nitya v Société VR Services, 14-11085.
(33) CA Paris, October 14 2014, SA Auto Guadeloupe Investissements v Columbus Acquisitions Inc et al, 13/13459.
(34) It is noteworthy that in Columbus the Paris Court of Appeal defined "apprehensible information" (in French, 'notoire') as "publicly and very easily accessible information that the parties cannot fail to consult prior to the commencement of the arbitration proceedings, such as to characterise the overt character of the conflict of interests" (CA Paris, October 14 2014, 13/13459).
(35) See also CA Reims, November 2 2011, SA J&P Avax v Société Tecnimont SpA, 10/02888; and CA Paris, February 12 2009, SA J&P Avax v Société Tecnimont SpA, Rev Arb 2009, 186.
(36) CA Paris, October 30 2012, Chambre Arbitrale Maritime de Paris et Generali Iard v Nykcool AB, 8 Gaz Pal 15.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.