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Cour de cassation upholds decision to set aside an award following an arbitrator's non-disclosure
By Laurence Franc-Menget & Peter Archer
In a judgment issued on 3 October 2019, the Cour de cassation (French Supreme Court) upheld a Court of Appeal decision setting aside an award as a result of an arbitrator’s non-disclosure. The judgment is a helpful illustration of the scope of arbitrators’ obligations in respect of disclosure once a tribunal has been constituted – and a warning to arbitrators of the need to be proactive.
Background
The French Code of Civil Procedure
Under article 1456 of the French Code of Civil Procedure (CPC):1
“Before accepting a mandate, an arbitrator shall disclose any circumstance that may affect his or her independence or impartiality. He or she shall also disclose promptly any such circumstance that may arise after accepting the mandate”.
The limited grounds on which an international award may be set aside are set out exhaustively in article 1520 of the CPC. One of those grounds is that the arbitral tribunal was not properly constituted (art. 1520 2°).
The arbitral award and its annulment by the Paris Court of Appeal
In February 2013, Saad Buzwair Automotive Co (SBA) commenced an ICC arbitration against Audi Volkswagen Middle East Fze (AVME). SBA nominated “Q” as its appointee to the arbitral tribunal. The arbitration was seated in Paris.
The tribunal issued an award in March 2016 (Award), rejecting SBA’s claims. SBA subsequently learned that Q’s firm had advised members of the Volkswagen group, including Porsche, on various occasions, both before and during the arbitration. As a result, SBA successfully sought the annulment of the Award.
AVME appealed against the Paris Court of Appeal decision annulling the Award. The Cour de cassation (French Supreme Court) rejected the appeal and upheld the annulment.
The Cour de cassation decision
The Cour de cassation ultimately considered the substance of four of the grounds on which AVME had appealed.
First, that an arbitrator is not required to disclose to the parties facts which are widely-known or easily accessible (faits notoires ou aisément accessibles). The JUVE handbook is known to every commercial law firm in Germany, and the Court of Appeal had recognised that information published in the 2010/2011 edition should be regarded as widely-known (as was the case regarding the representation of Volkswagen Bank by Q’s firm). The 2015/2016 edition, which was published prior to issue of the Award, revealed that the arbitration and litigation department in Q’s firm was representing Porsche in ongoing litigation, and the Court of Appeal should have found that this information was also widely-known, with the result that Q was not required to disclose it. The Court’s failure to do so, AVME argued, breached articles 1456 para. 2, 1506 et 1520 2° of the CPC.
Second, that, in any event, an award may only be set aside for non-disclosure if the non-disclosed circumstances are such as to give rise to reasonable doubts in the minds of the parties as to the independence and impartiality of the arbitrator concerned. The Court of Appeal had found that Q’s firm had considered Porsche to be a significant client, mentioning it in its marketing and including it in its five most noteworthy matters. For the Court, this was sufficient to create a reasonable doubt in respect of Q’s independence and impartiality, and the Court had also noted that in 2010 Porsche had instructed the firm in a relatively minor matter which Q had not disclosed and the firm had not publicised.
ReSolution | Mar 2020