Zeyad Abouellail*
Paris Court Of Appeal, CCI, Pôle 5 – Chambre 16, 25th Of February 2020: N° 19/07575, N° 19/15816, N° 19/15817, N° 19/15818, N° 19/15819
The newly established International Commercial Chamber of the Paris Court of Appeal recently rendered its first – and much anticipated – decision in setting aside proceedings against an international arbitral award. This decision, constituted of a series of judgments rendered on the same day and in the same case, gives important precisions on the control of arbitrators’ independence and impartiality and clarifies the extent of their duty of disclosure.
The Case
Three Brazilian companies were involved in an offshore oil project in Brazil (Dommo, Barra, and Enauta[i]). In view of the realisation of this project, the companies were members of a Consortium governed by a joint operating agreement. A dispute arose in connection with the execution of the project and Dommo was later excluded from the Consortium. This exclusion prevented Dommo from selling its stake to a third party.
Dommo initiated an arbitration before the London Court of International Arbitration (LCIA) against Barra and Enauta (respondents). The arbitrators transmitted their respective declarations of independence in November 2017. Once constituted, the arbitral tribunal, sitting in Paris, rendered an interim award on bifurcation and then rendered five interim and costs awards (the Awards) between February 2018 and January 2019.
In the course of proceedings, Barra added a new lawyer to its team of counsel. This arrival of a new lawyer forced the arbitrator appointed by the respondents to update his declaration of independence in November 2018. Subject to his updated declaration, Dommo requested clarifications from the co-arbitrator. In his clarifications, the latter stated that he was counsel from 2012 to 2015 (around two and a half year before the start of the arbitration) at a Saudi firm, itself affiliated with the law firm of Barra’s new lawyer, whose clients are two of Barra’s majority shareholders.
In light of these elements, Dommo filed a challenge against the co-arbitrator with the LCIA, which was rejected in February 2019. Accordingly, it was in the context of the applications to set aside the Awards before the Paris Court of Appeal that Dommo reiterated its concerns on the respondent-appointed arbitrator’s independence and impartiality, as the set aside proceedings were initiated on the ground that the arbitral tribunal was irregularly composed[ii].
The Annulment Proceedings
Dommo argued that the arbitrator’s failure to disclose the link between him and a firm whose clients are Barra’s shareholders was sufficient to cast doubt on the arbitrator’s independence and impartiality from the point of view of a \”reasonable observer\” (¶ 25). Dommo also alleged that its challenge was not premature since the information was not easily accessible and refuted the presumption of public knowledge as it claimed that the presence of the information in question on the internet didn’t necessarily mean that it was easily accessible. It asserted that the “duty of curiosity” (devoir de curiosité), which is imposed on the parties at the start of arbitration, requires only that due diligence be performed, the parties not being required to carry out in-depth research.
In response, Barra and Enauta argued that the information was public knowledge. As such, Dommo did not fulfil its duty of curiosity when it could have easily accessed the information. The respondents asserted that the immaterial and indirect nature of the links existing between the arbitrator and Barra was not of a nature such as to create a reasonable doubt in the minds of the parties as to the arbitrator’s independence nor affect his judgment.
In summary, the allegations of the parties related to (i) the alleged publicity of the information in question and whether the arbitrator should have disclosed them and (ii) whether the links between the arbitrator and the party in question were likely to influence the arbitrator’s independence and impartiality.
The Court’s answer was twofold: in light of the evidence presented, (i) the Court finds that the information was not public and that the arbitrator had a duty to disclose such information that can give rise to doubts about his independence. Nonetheless, (ii) the Court rejected the setting aside of the Awards as it found that the links between the arbitrator and Barra are unsubstantiated and do not influence the arbitrator’s independence nor affect his judgment.
How Did The International Commercial Chamber Analyse The Alleged Publicity Of The Information?
Under French law, an arbitrator must disclose any circumstances that could give rise to a reasonable doubt regarding their independence or impartiality[iii]. The Court explained that the duty of disclosure must be assessed in the light of both the publicity of the criticised situation and its reasonably foreseeable influence on the arbitrator’s judgement (¶ 43), confirming prior case law[iv].
In regard to information subject to disclosure, it is generally considered in French jurisprudence that only information linked to the dispute are in principle concerned[v]. This approach is shared by other jurisdictions, as a German court considered that in principle, an arbitrator must not disclose all information but only the relevant circumstances which in the view of the parties can reasonably cast doubts about his independence and impartiality[vi].
French law notably exempts the arbitrator from disclosing what is publicly known (exception de notoriété)[vii]. However, it is in deciding what constitutes “public” information that resides the main difficulty. Even if prior case law admitted the public character of information available on the internet[viii], this decision reinforces the uncertainties of this affirmation, as not all information available on the internet is mechanically easily accessible[ix].
The Court adopted a very pragmatic approach in its decisions to admit that the information was not public knowledge and that it should have been disclosed by the arbitrator (¶. 52), even though available on the internet. The Court concretely analysed the necessary operations to access the information in question. It noted that access to this information is only possible “after a thorough examination and careful consultation of the website of the arbitrator, requiring that all links relating to the conferences in which he has participated be opened and the content of the publications to which he has contributed to be consulted” (¶. 51).
The Court seems to set out criteria to characterise accessibility of information available on the internet, as the information should be mentioned in a “clear, evident and transparent manner” (¶49).
The Court concluded that this information cannot be considered public knowledge as it was not easily accessible because it required “operations which amount to investigative measures\” (¶. 52). Even though in practice it is usual for counsels to intensively research arbitrators following nomination, it appears here that the Court doesn’t wish to formalise these proceedings and underpins the importance of the arbitrator’s duty of disclosure. In essence, this decision is in line with previous French case law which suggests that it cannot be required “that the parties engage in a systematic examination of the sources likely to mention the name of the arbitrator and of persons related to him\”[x]. Most interestingly, this decision confirms the reinforced nature of the arbitrator’s duty of disclosure and its purpose to allow the parties to appreciate the arbitrator’s bias and to eventually challenge it[xi].
The Affirmation Of The Dissociation Between Undisclosed Information And The Lack Of Independence And Impartiality
The Court endorsed the view expressed by prior French jurisprudence regarding the absence of a direct link between failure to disclose and lack of independence[xii]. The Court held that non-disclosure by the arbitrator of information is not sufficient to constitute a lack of independence or impartiality, but rather that concrete proof of bias is required ((¶. 53). This is an opportune solution, as it would be non-sensible to automatically deduct bias from non-disclosure and therefore allow abusive set aside proceedings on the basis of a possible mistake from the arbitrators. Similarly, an English court has ruled that non-disclosure by the arbitrator of a previous non-executive mandate with a competitor of one of the parties to the arbitration does not necessarily make him biased[xiii]. In Switzerland, non-disclosure does not automatically render an award invalid[xiv].
The Court gives a broad interpretation of the duty of disclosure and reaffirms the varied nature of the circumstances to be disclosed. These links can be maintained by the arbitrator with the parties, but also with \”third parties likely to be interested in the dispute\” (¶. 42).
In this case, there appears a question of a potential indirect conflict of interest, i.e. a situation involving a number of intermediaries between the arbitrator and one of the parties. Cases of indirect conflict of interest have been more omnipresent in recent French case law and the links between an arbitrator and the firm in which he practices have been put into the spotlight[xv]. In the present case, the link invoked concerned the arbitrator and two of the respondent’s shareholders (Barra), and the business stream did not directly involve the arbitrator, but a firm affiliated with the firm in which he practiced. These elements may have played an important role in the reasoning of the Court, as it explained in the motif of its decision that the alleged links are not likely to create a doubt on the arbitrator’s independence and impartiality, “all the more so that the ties between the arbitrator and the shareholders\’ firm were indirect, through another firm” (¶. 58, emphasis added).
To analyse if the circumstances in question do influence the arbitrator’s independence, the Court puts in motion the reasonable doubt criterion and delves into an in concreto assessment of the alleged bias of the arbitrator. Numerous other national courts have also adopted pragmatic in concreto approaches when assessing potential conflict of interests, particularly in Belgium, Germany, Italy, Switzerland or the United States, where it is it is often a concrete proof of bias that is required[xvi].
The Court analysed the ties between the arbitrator on the one hand, and Barra and its shareholders on the other. It held that the arbitrator’s previous position as counsel should have generated a “direct or indirect, material or intellectual link” or a “business stream” with Barra’s shareholders, or even a maintained interest between the arbitrator and the law firm of Barra’s new lawyer for it to create a conflict of interest (parg. 56). Such links were not established in the present case. The Court concluded that the circumstances do not establish the existence of any link between the arbitrator and the shareholders that is likely to “create a reasonable doubt on the arbitrator’s independence and impartiality” (¶. 58).
It is rather curious to note that the Court affirmed that the use by the arbitrator of an email address with the domain of Barra’s new lawyer’s firm is not sufficient to establish a link between the arbitrator and the firm nor likely to create a reasonable doubt as to the arbitrator’s independence (¶58).
Ultimately, the Court considers that the annulment of an arbitral award cannot be systematic following failure to disclose relevant information by an arbitrator, even if the duty of disclosure must be interpreted as broadly as possible. The solution it adopts is convincing and rational in regard to potential abuse of annulment proceedings.
[i] Dommo Energia SA, Barra Energia do Brasil Petróleo e Gás Ltda, Enauta Energia SA (formerly Queiroz Galvão Exploração e Produção SA)
[ii] Article 1520 (2°) of the French Code of Civil Procedure.
[iii] Article 1456 (2°) of the French Code of Civil Procedure.
[iv] See C. Seraglini and J. Ortscheidt, Droit de l’arbitrage interne et international, 2nd edition, 2019, LGDJ, p. 736, § 746.
[v] Ibid.
[vi] Higher Regional Court of Naumburg, OLG Naumburg, 19 December 2001, 10 SchH 3/01.
[vii] See Civ. 1, 3 October 2019, Sté Audi Volkswagen Middle East Fze LLC c/ Sté Saad Buzwair Automotive Co.; Civ. 1, 25 May 2016; Paris Court of Appeal, 2 July 2013, La Valaisanne Holding; Paris Court of Appeal, 13 November 2012, SA Fairplus Holding c/ Sté JMB Corporation; Paris Court of Appeal, 10 March 2011, Tecso c/ Neoelectra.
[viii] Civ. 1, 15 June 2017, République de Guinée Equatoriale c/ Sté Orange Middle East and Africa
[ix] See C. Doctrine, Limites de l\’obligation de révélation de l\’arbitre : premières précisions de la CCIP-CA, Dalloz Actualité, 27 April 2020.
[x] Civ. 1, 3 October 2019, Sté Audi Volkswagen Middle East Fze LLC c/ Sté Saad Buzwair Automotive,
[xi] See D. Cohen, Indépendance des arbitres et conflits d\’intérêts, Revue de l\’Arbitrage, Comité Français de l\’Arbitrage, 2011, Issue 3, p.628 §. 40.
[xii] Civ. 1, 10 October. 2012, Tecso c/ Neoelectra; Paris Court of Appeal, 12 January. 1996, Qatar c/ Creighton.
[xiii] Court of Appeal, AT & T Corp. c/ Saudi Cable Co., 2000, B.L.R. 293.
[xiv] M. Leemann, Challenging international arbitration awards in Switzerland on the ground of a lack of independence of an arbitrator, 2011, ASA Bulletin, p. 14
[xv] D. Cohen, Indépendance des arbitres et conflits d\’intérêts, Revue de l\’Arbitrage, Comité Français de l\’Arbitrage, 2011, Issue 3, p.628 §. 37-39.
[xvi] Ibid., p. 642, § 58.