In a decision handed down 10 October 2012, the French Supreme Court held that an arbitrator who failed to disclose facts that objectively might have called into question his impartiality or independence, did not of itself mean he had failed in his obligation of impartiality and independence. It must be shown that the circumstances are such as to create a reasonable doubt as to the independence or impartiality of the arbitrator in the minds of the parties.
The claimant in an arbitration, Tecso, had failed in its claim against Neoelectra Group. It sought to challenge the award before the Paris Court of Appeal, alleging that the arbitrator in question was not independent. Tecso relied on the fact that the arbitrator had been counsel between 1989 – 2000 of the same law firm as Neoelectra’s counsel, and had provided advice to the law firm on two or three occasions since then.
The Supreme Court, reversing the Court of Appeal, held that the Court of Appeal decision was not sufficiently reasoned. The Court of Appeal had failed to explain how the facts identified could be said to give rise to reasonable doubt as to the impartiality or independence of the arbitrator.
The Supreme Court’s decision relates to the position under French law prior to the significant revisions in French arbitration law introduced in 2011 (refer to Reed Smith Client Alert dated 25 May 2011). However, looking forward, nothing in the revisions is likely to affect the approach clearly set out by the Supreme Court in its judgment.
The decision is a welcome one. It clearly spells out that an arbitrator’s failure to disclose potentially relevant facts and materials in relation to his or her independence and impartiality, does not automatically taint the arbitrator’s work and the consequent award.
Some residual doubt had existed over whether failure to reveal was synonymous with lack of independence. This decision of the Supreme Court makes the position clear. Parties seeking to challenge an award will need to explain in unambiguous terms how any failure to disclose creates reasonable doubt as to an arbitrator’s independence or impartiality.
It should be noted, however, that the Supreme Court judgment does not shed light on the vexed question of the extent of disclosure that is required of the arbitrator, and how such disclosure informs the arbitrator’s duty of independence and impartiality.