The most relevant European updates from the global International Arbitration and ADR practice group at Garrigues.
Arbitrator’s liability claim jurisdiction clarified by a Court in Paris
The Tribunal Judiciaire de Paris has recently held that an arbitrator’s liability suit must be determined in the jurisdiction in which the challenged arbitrator primarily performed his duties,which may not necessarily coincide with the place of the arbitration.
The case presented to the French Court is based on the annulment of an ICC award settling a dispute arising from the non-renewal of spare parts and vehicle distribution agreements. The Paris Court of Appeal annulled the ICC award as the arbitrator failed to disclose a connection between the law firm he worked for and one of the parties to the arbitration.
Seeking liability for the arbitrator’s actions, the suit was filed before the French Courts as the arbitration was seated in Paris. However, the Court recently declared lack of jurisdiction to hear the proceedings under the premises of the Brussels I Regulation as it was determined that the arbitrator was based in Germany and primarily carried out his activity in that country, thus rendering the German Court’s competent to rule over the suit in question.
Bias challenge against ICC award dismissed by the French Court of Cassation
Galeries Lafayette has failed to set aside before France’s Cour de Cassation a €680 million ICC award in favour of BNP Paribas on the basis that the tribunal was unduly biased.
Galeries Lafayette and the bank’s subsidiary BNP Paribas Personal Finance held equal shares in joint venture LaSer (the owner of consumer credit group Laser-Cofinoga), which provides personal loans and insurance products. In this context, Galeries Lafayette exercised a put option to sell its stake in LaSer to BNP Paribas in exchange for a price that would be determined by three financial experts, who unanimously concluded that the price amounted to €102.5 million.
However, Galeries Lafayette initiated a Paris-seated ICC arbitration against BNP arguing that the calculated price was an undervaluation and requesting the voidance of the sale plus €680 million in damages. The final award rejected Galeries Lafayette’s claim concluding that the experts had made no gross error in the calculation and ordering claimant to pay the costs and two-thirds of its legal fees.
After challenging the award before the Paris Court of Appeal contending that a series of contradictions about the report showed that the three experts had conducted themselves in a biased manner, Galeries Lafayette saw how the Paris Court of Appeal ruled that there was no manifest evidence of bias by the tribunal that could justify overturning the award. Finally, Galeries Lafayette appealed that decision to the Court of Cassation who has concluded that because the appeal was manifestly without merit, the Court need not go into the merits of the case nor offer an argued ruling.
Dutch Appeal Court rules in favour of GrandVision in the Essilux case concerning the adopted COVID-19 measures
The Amsterdam Court of Appeal has ruled in favour of GrandVision in its lawsuit with French-Italian eyewear maker EssilorLuxottica (also known as Essilux) The judgment confirms an earlier judgment by the District Court in August last year refusing a request for disclosure of documents from Dutch eyewear maker GrandVision relating to its efforts to mitigate the impact of Covid-19 pandemic.
The Franco-Italian group, which last year agreed to pay around €5.5 billion in cash to acquire HAL’s nearly 77% stake in GrandVision, had filed proceedings in order to obtain information over the way Grandvision had managed its business during the coronavirus pandemic and to assess the extent to which it may have breached its obligations under a support agreement between the two parties.
The dispute arose after Essilux expressed concern that the measures taken by GrandVision were a material breach of their agreement, including changes to supplier payment terms, postponement of rents and additional borrowing.
The Court of Appeal held that Essilux’s purchase of GrandVision was the subject of ICC arbitration in Geneva and that the parties had agreed to limited discovery in those proceedings. In this sense, the Court found that the company had not shown it had a legitimate interest in inspecting these.
As announced in a recent GrandVision press release, they continue supporting EssilorLuxottica with the shared objective to obtain regulatory approval for the closure of the transaction before 31 July 2021.
Spain files to annul ICSID award
Spain has recently filed an annulment claim, which includes a stay of enforcement request, before ICSID against a €28 million Energy Charter Treaty (“ECT”) award ordered in favour of German RWE Innogy in relation to a dispute over Spain’s change in renewable energy regulations.
This is the latest episode in one of more than 50 arbitrations that Spain has faced over the subsidies to the renewable energy sector. On this particular occasion, the arbitral tribunal issued a decision on jurisdiction, liability and damages in 2019, concluding that Spain was in breach of the ECT by inflicting a “disproportionate” impact on RWE with the controversial reforms and ordering the State to pay US $ 28 million in damages and nearly €3 million in costs.
Although Spain’s petition for annulment remains unpublished, the State is still battling in a variety of arbitration, annulment and other proceedings in relation to its renewable energy reforms.
The Madrid High Court incorporates the Constitutional’s Court doctrine in favour of arbitration
In a recent decision the Madrid High Court has abandoned its own precedent and has adopted the Constitutional’s Courts approach to the issue of whether a party may abandon an annulment procedure it has already started.
Until now, the High Court had held that the annulment procedure took precedence over the private interest of parties to annul an award as it dealt with crucial legal issues of public order and other procedural and due process guarantees. This meant that, once commenced, an annulment procedure could only be ended by a Court ruling and never by a decision of the party seeking the annulment to abandon or withdraw from the proceedings.
Against this line of reasoning, Spain’s Constitutional Court issued a decision in June 2020 in which it held that a party seeking an annulment could indeed withdraw from the proceedings thus preventing the court from proceeding with the matter.
Accepting the Constitutional Court’s hierarchical precedence within the judiciary, the Madrid High Court has recently accepted that a party can end an annulment procedure by withdrawing its annulment request.