On 12 April 2016, the Paris Court of Appeal rendered a 5th decision in the “Tecnimont” case, dismissing the application by the company J&P Avax (“Avax”) to set aside a partial award rendered on 10 December 2007 on the basis that the Arbitral Tribunal was not properly constituted .
As a reminder, this case involves a dispute that arose between the Greek company Avax and its subcontractor, the Italian company Tecnimont Spa (“Tecnimont”), during the construction of a propylene plant in Thessalonique.
In accordance with the arbitration clause binding the parties, Tecnimont introduced a request for arbitration before the International Chamber of Commerce (“ICC”). On 10 December 2007, the Arbitral Tribunal rendered a partial award on liability (hereafter the “partial award”).
In turn, AVAX applied before the French courts to determine whether the partial award had been rendered by a properly constituted Arbitral Tribunal, which Avax disputed.
- On 12 February 2009, the Paris Court of Appeal, further to AVAX’s application, decided to set aside the partial award for irregularity in the constitution of the Arbitral Tribunal on the grounds that (i) the firm in which the President of the Arbitral Tribunal was Of Counsel had provided consulting and assistance services to a subsidiary and the parent company of Tecnimont a few months before his appointment was accepted and (ii) the Parisian office to which the arbitrator belonged had represented a subsidiary of Tecnimont while the proceedings were pending and after the issuance of the partial award by the Arbitral Tribunal;
- On 4 November 2010, further to Tecnimont bringing the case to the Cour de cassation, the latter overturned the Paris Court of Appeal’s decision on the grounds that “nearly all of the reported facts were already included in the challenge of arbitrator submitted on September 14, 2007”, challenge that had been dismissed by the ICC.
- On 2 November 2011, the Reims Court of Appeal, to whom the case was referred back to, annulled the award after having held that “Avax’s lack of information on these facts [namely, the link existing between the firm to which the arbitrator belongs and Tecnimont], followed by an incomplete and piecemeal disclosure, is of a nature such as to reasonably create doubts as to the independence” of the President of the Arbitral Tribunal;
- On 25 June 2014, the Cour de cassation overturned the decision of the Reims Court of Appeal on the grounds that the Court of Appeal must “establish whether, for each of the facts and circumstances that it retains as constitutive of a breach of the arbitrator’s obligation of independence and impartiality, the 30-days limit prescribed by the arbitration rules to challenge the arbitrator had been complied with.”
It is under these circumstances that the Paris Court of Appeal, having the case referred back to it, ruled again on the proper constitution of the Arbitral Tribunal and, this time, dismissed the application to set aside the partial award initiated by Avax on the following grounds:
- The Court of Appeal held that Avax was no longer admissible to invoke facts that were already specified in its request for challenge of the arbitrator, since “the challenge, submitted more than one month after Avax received the information that deteriorated its confidence in the President of the Arbitral Tribunal, and without any notorious additional information having been discovered in the meantime, is late”;
- Regarding the links Avax referred to, between the company Sofregaz, that belongs to the same group as Tecnimont, and the Parisian office where the President of the Arbitral Tribunal works, links which were not included in the request for challenge but of which it was aware as early as August 2007 following investigations that it had undertaken, the Court of Appeal considers that “the alleged investigations are taken from Sofregaz’s website; they are public and easily accessible”. The notoriety of these links involved, then, that they cannot be retained by the Court of Appeal as a ground for setting aside the award. This way, the Court imposes an extensive obligation on the parties to inquire about the links existing between the parties and the arbitrators. One will note, however, that the same chamber of the Court of Appeal had previously ruled the opposite on 14 October 2014 (n°13/13459) (previously commented here): “if public and very easily accessible information, that the parties could not have failed to consult before the proceedings, is of a nature to characterize the notoriety of a conflict of interest, however, it would not be reasonable to require that the parties engage in a systematic analysis of sources likely to mention the arbitrator’s name and the persons linked to him, nor that they continue their investigations after the beginning of the arbitration proceedings”.
- Finally, as regards the information brought to Avax’s knowledge after its request for challenge the President of the Arbitral Tribunal, relating to other links existing between the firm to which the President belongs and Tecnimont and Sofregaz, the Court of Appeal decided that these links “were not of a nature to aggravate in a significant manner the doubts on the arbitrators independence and impartiality that could have resulted from the information already available to Avax before its request for challenge”. Therefore, even if these links had not been brought to the parties’ knowledge, the Court considers that they are not sufficiently determinant to lead to the annulment of the award.
We would like to thank Professor Thomas Clay and the Laboratoire Dante for having provided us with the decision and retain with interest the attached commentary: this decision is “the confirmation of the shift from independence to disclosure and from disclosure to reaction” since “the issue is no longer to know whether or not the undisclosed facts affect the arbitrator’s independence, but whether they had been revealed in time”.
We would add that this decision raises again the question of the duty to investigate born by the parties, which, however, seemed to have been discarded a few months earlier.
The decision, in French, is available here.