In Port Autonome de Douala v. Douala International Terminal Co. (original French, my translation), the French Court of Cassation (France’s Supreme Court) upheld the Paris Court of Appeal’s decision (original French, my translation) to set aside an arbitral award rendered by a three-arbitrator tribunal based on doubts as to the impartiality of the presiding arbitrator. Those doubts arose from a eulogy he gave of the lead counsel for one of the parties, which revealed that they were close personal friends and that the presiding arbitrator consulted that counsel “before making any important decision”.
The underlying dispute – The dispute arose from a concession agreement awarded by Port Autonome de Douala (“PAD”), the agency of the Government of Cameroon that manages the Cameroonian capital’s port, to Douala International Terminal Co. (“DIT”) to manage and operate the container terminal at the port.
The arbitration – DIT is a company registered in Cameroon, but is majority owned by major international shipping companies. The agreement included an arbitration clause providing for ICC arbitration with a Paris seat.
DIT brought an arbitration before the ICC, and a three-member arbitral tribunal was appointed.
The tribunal rendered a partial award dismissing certain jurisdictional and admissibility objections raised by PAD, finding that PAD had breached its obligations under the concession agreement, and ordering PAD to pay compensation to DIT in an amount to be quantified at a later phase of the arbitration.
The eulogy – DIT’s lead counsel in the arbitration was a prominent French international arbitration practitioner, who died suddenly after the partial award was rendered and while the remainder of the arbitration was ongoing.
The presiding arbitrator published a eulogy of that counsel in the French legal press (eulogist’s English version). He stated:
“[eulogist’s own English version] It was under these circumstances that I was to meet him again in three weeks at hearings where he was to appear as counsel, and I, as arbitrator. I was looking forward to hearing again his impressive knife-edge pleadings, where his precision and overreaching vision seduced me much more than any histrionic outbursts. This meeting will not take place, nor will our regular meetings that were ongoing since January 2000, when he sat as rapporteur as part of my thesis examination committee. We became friends immediately after, ignited by the same passion and the same conception of international arbitration. During our travels and trips abroad, particularly to Brazil and Colombia, our friendship took on a more personal note, as Emmanuel, who rarely did so, was finally opening up. For my part, I consulted him before making any important decision. He was a joyful, funny, generous, brilliant, caring and yet humble person. He had a youthful appearance, a healthy and athletic lifestyle that could not have foreshadowed such a near and brutal end. I think of his two sons whom he was so close with. I think of his partners and associates. I think of all those he inspired or trained. I think of the abysmal void he has left behind that will never be filled. He was a master, a mentor and a role model whose legacy will live on. I admired and loved him.”
When accepting the appointment, the presiding arbitrator had not disclosed any ties with DIT’s counsel.
Set-aside application and challenge – After becoming aware of this eulogy, PAD applied to the Paris Court of Appeal to set aside the partial award. The main ground for set aside PAD invoked was that the arbitral tribunal was improperly constituted, because the presiding arbitrator’s close friendship with DIT’s counsel, which had not been disclosed and was not known before the eulogy, gave rise to reasonable doubts as to his impartiality.
Since the arbitration remained ongoing, PAD also challenged the presiding arbitrator before the ICC International Court of Arbitration, which dismissed the challenge. (The ICC Court’s decision is not publicly available.)
Paris Court of Appeal’s decision – The Paris Court of Appeal agreed with PAD, and set aside the partial award on impartiality grounds (original French, my translation).
Guiding principles on arbitrator impartiality and disclosure obligations – The Court of Appeal noted that under the French Civil Procedure Code, “arbitrators must disclose any circumstances likely to affect their independence or impartiality before accepting their appointment”, and “must also immediately disclose any circumstances of a similar nature that may arise after they have accepted their appointment.”
Observing that the scope of the disclosure obligation is not set out in the Code, the Court of Appeal cited the recommendations set out in the ICC’s “Note to parties and arbitral tribunals on the conduct of the arbitration under the ICC Rules of Arbitration dated 1 January 2019”, in effect when the tribunal was constituted, which give arbitrators, “an objective frame of reference for meeting this obligation.”
Specifically, Article 11 of the ICC’s Note provides that arbitrators “must be and remain impartial and independent of the parties involved in the arbitration.” Both at the time they accept an appointment and during the arbitration, arbitrators must “disclose in writing to the Secretariat any facts or circumstances which might be of such a nature as to call into question the arbitrator’s independence in the eyes of the parties, as well as any circumstances that could give rise to reasonable doubts as to the arbitrator’s impartiality.”
The Court of Appeal also cited the provisions of the ICC’s Note setting out specific situations that give rise to a disclosure obligation, which include where the arbitration “has a professional or close relationship with counsel to one of the parties or the counsel’s law firm”.
It further noted that, apart from the circumstances explicitly provided for, “arbitrators must disclose circumstances which, although not included in this list, may be such as to give rise to reasonable doubt in the parties’ minds as to the arbitrator’s independence and impartiality, that is, doubts that may arise in a person in the same situation who has access to the same information.”
Whether a circumstance gives rise to a reasonable doubt in the parties’ minds as to an arbitrator’s impartiality “must be assessed objectively, taking into account the particular circumstances of the case.”
Moreover, as set out in the ICC’s Note, “any doubt must be resolved in favour of disclosure”.
Paris Court of Appeal’s analysis – The Court began its analysis by acknowledging that academic and professional ties do not necessarily imply that a “close” professional or personal relationship exists. It rejected PAD’s arguments arising from certain academic ties between the presiding arbitrator and DIT’s counsel.
Turning to the eulogy, the Court of Appeal found that the statements “evidenced the friendship” between the presiding arbitrator and DIT’s counsel. The Court highlighted in particular the arbitrator’s statement that he consulted the counsel “before making any important decision”, and that the counsel, “who rarely did so”, was “opening up” to the arbitrator.
Even taking in into account the nature of a eulogy, which “is by nature an exaggeration”, the Court held that the “closeness and intimacy that this reveals are such that, unless the concept is stripped of its substance, the relationship can only be regarded as constituting close personal ties.”
Beyond the general friendship, the eulogy also revealed a connection with the arbitration at issue:
“It was under these circumstances that I was to meet him again in three weeks at hearings where he was to appear as counsel, and I, as arbitrator. I was looking forward to hearing again his impressive knife-edge pleadings, where his precision and overreaching vision seduced me much more than any histrionic outbursts. This meeting will not take place, nor will our regular meetings”.
This, together with the statement about consulting DIT’s counsel “before making any important decision”, “was of such a nature as to lead the parties to believe that the president of the arbitral tribunal might not be able to decide freely, and thus to give rise to reasonable doubt in PAD’s mind as to the arbitrator’s independence and impartiality.”
Thus, the Court of Appeal concluded that the arbitral tribunal was improperly constituted. The finding that the ties between the presiding arbitrator and DIT’s counsel gave rise to reasonable doubt as to the arbitrator’s impartiality meant that the award had to be set aside, and there was no need for the Court to consider the other grounds of appeal.
Court of Cassation’s analysis – DIT appealed to the Court of Cassation, France’s Supreme Court, which upheld the Paris Court of Appeal’s decision (original French, my translation).
After recalling the Paris Court of Appeal’s reasons, the Court of Cassation agreed and held that, “[b]ased solely on these findings and assessments which are grounded in objective evidence taken from the contents of a publication issued by the president of the arbitral tribunal referring to close personal ties with a party’s counsel, the Court of Appeal did not err in law.”
Contributor’s Notes:
First, covering foreign cases is important – While Arbitration Matters has covered non-Canadian cases before, this is the first time we are writing about a case from a non-Canadian civil law jurisdiction.
Although Canadian courts frequently refer to the decisions of non-Canadian courts rendered in English from common law jurisdictions, it is less common for them to refer to the decisions of courts from non-English speaking civil law jurisdictions. Perhaps this is because of a language barrier, or a cultural barrier, or a bit of both.
Yet for international arbitration to function as a coherent worldwide system that leads to predictable outcomes for parties, I think it is important for parties and courts from all over the world to have access to, and rely on, decisions from all major arbitral seats, regardless of the language they are issued in.
Recall that the Ontario Court of Appeal stated in Luxtona Limited v. The Russian Federation, 2023 ONCA 393that the uniformity principle in Article 2A(1) of the Model Law “makes international decisions strongly persuasive in Ontario”, and that “the very nature of international arbitration makes it highly desirable that Ontario’s regime be coherent with those of other countries, especially (but not exclusively) those that have also adopted the Model Law.” (Case Note No. 748 – Ontario – Courts must decide arbitral jurisdiction de novo – #748 – Arbitration Matters).
International decisions cannot be persuasive, strongly or otherwise, if they are not made available to Canadian practitioners and courts. Since Paris is one of the most prominent arbitral seats, the Paris Court of Appeal and the French Court of Cassation generate a wealth of jurisprudence that could be useful to the international arbitration community. Given how prominent this case has been in the international arbitration press, it makes sense for the decisions to be available to the international arbitration community in English, for those who do not read French. I hope that my translations linked to above are helpful in this regard.
Second, similar statutory frameworks – Note that the statutory framework the French courts applied in this case for determining whether the tribunal was improperly constituted due to bias was not substantively different than the framework that applies in Canada.
For example, Article 34(2)(a)(iv) of the UNCITRAL Model Law on International Commercial Arbitration (for Ontario, it is set out in Schedule 2 to the International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sched. 5) provides that a court may set aside an award if “the composition of the arbitral tribunal … was not in accordance with the agreement of the parties.” Article 1520(2) of the French Civil Procedure Code similarly provides that set-aside is possible if “the arbitral tribunal was improperly constituted”.
Based on this and the guidance from the Ontario Court of Appeal in Luxtona, the French courts’ decisions in this case should be strongly persuasive to Canadian courts.
Third, IBA Guidelines also require disclosure of friendships – The International Bar Association’s IBA Guidelines on Conflicts of Interest in International Arbitration are another frequently cited source of guidance on which circumstances may give rise to doubts as to an arbitrator’s impartiality. The Paris Court of Appeal did not need to cite them, since it had the benefit of the ICC’s Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration, which also provides guidance in this regard.
Under the IBA Guidelines (item 3.2.6, orange list), an arbitrator must disclose circumstances where a “close personal friendship exists between an arbitrator and counsel of a party”. This provides further support for the Paris Court of Appeal’s decision.
Fourth, unanimity was irrelevant – Once the Paris Court of Appeal found that there was a reasonable doubt as to the presiding arbitrator’s impartiality, it set aside the award. There was no question of letting the award stand because the arbitrator was one of only three and the award was unanimous.
In contrast, in Vento Motorcycles, Inc. v. United Mexican States, 2023 ONSC 5964, the Court found that there was a reasonable apprehension that a party-appointed arbitrator in a three-arbitrator tribunal was biased, but exercised its discretion not to set aside the award because the award was unanimous and there was no such apprehension about the other two arbitrators. (Case Note 796 – Ontario – No unfairness despite Browne v Dunn violation and arbitrator reasonable apprehension of bias).
That case is now before the Ontario Court of Appeal. The French court’s decisions will be brought to the Ontario Court of Appeal’s attention.
