In a decision rendered on 10 January 2023 (20/18330), the Paris Court of Appeal ruled on the issue of the arbitrators' duty to disclose in relation to a unique case. While the merits of the case and the issues raised were common, the decision was highly publicised because of the identity of the persons involved, two being famous protagonists in the arbitration world. The decision led to a “severe” decision, strengthening the arbitrators’ duty to disclose to an extent that might appear questionable for some.
The duty of revelation under French law
First, it is necessary to go back to the principles established by French law in relation to the arbitrators’ duty to disclose since the courts frequently restate them.
Article 1456 of the French Code of Civil Procedure imposes a disclosure obligation on arbitrators, the objective being that an arbitrator discloses any fact or circumstance, which from the perspective of a reasonable third person would give rise to justifiable doubts as to their impartiality or independence. Article 1456’s obligation is continuous and does not cease upon the appointment of the arbitrator. Once appointed, it is the arbitrator's responsibility to disclose any circumstances that may affect their independence.
However, only relevant and unknown facts have to be disclosed, well-known facts do not if they are defined as “easily accessible public information that the parties could not fail to consult before the beginning of the arbitration proceeding” (Paris Court of Appeal, 26 January 2021, 19/10666, Vidatel).
On this basis, business interactions between an arbitrator and the parties to the arbitration proceeding must naturally be disclosed (Cour de cassation, 20 October 2010, 09-68.997) while academic relationships do not. Consequently, it was judged that an arbitrator’s participation in his capacity as a lawyer in a conference organised by a party, at which he did not intervene as a speaker, does not have to be revealed (Cour de cassation, 4 July 2012, 11-19.624).
The infringement of the duty to disclose is not by itself a cause for setting aside the arbitral award. The irregularity in the constitution of the arbitral tribunal will only be acknowledged if the non-disclosure creates a reasonable doubt in the minds of the parties as to the impartiality of the arbitrator (Cour de cassation, 10 October 2012, 11-20.299, Tesco).
Besides, the mere fact that the disclosure was incomplete is not considered sufficient to have an award set aside even if the incomplete disclosure was made by the opposing party as long as the facts on which an objection could have been raised against the arbitrator had been disclosed (Cour de cassation, 15 June 2017, n°16-17.108).
Factual summary
The dispute in question arose from a concession contract concluded between the Autonomous Port of Douala (PAD) and the company Douala International Terminal (DIT), relating to the management and operation of a container terminal. A disagreement arose over the distribution of revenues from the parking of containers and goods on the concession area.
On 16 January 2019, DIT, represented by Emmanuel Gaillard, filed an arbitration procedure before the ICC in Paris.
DIT appointed Professor Hugo Barbier and the PAD appointed Mr. Achille Ngwanga as arbitrators. Professor Thomas Clay was appointed as chairman.
In a partial award issued on 10 November 2020, the arbitral tribunal ordered PAD to compensate DIT for the damage caused by the breach.
PAD filed an action for annulment before the Paris Court of Appeal against this partial award.
In the meantime, Gaillard, professor of law and representative of DIT, died on 1 April 2021.
On 15 April 2021, Professor Thomas Clay published a eulogy in tribute to the late Emmanuel Gaillard (Th. Clay, In Memoriam Emmanuel Gaillard (1952-2021): D. 2021, p.705).
The eulogy revealed the existence of a personal and close relationship between the chairman of the tribunal and the counsel of DIT, and on that basis the PAD submitted on 20 April 2021 a request for the recusal of Thomas Clay to the Secretariat of the ICC International Court of Arbitration. This recusal request was rejected.
Based on the request of the PAD, the Court of Appeal decided to set aside the award based on the analysis that there were close personal ties between the chairman of the tribunal and DIT’s counsel, the lack of disclosure of which “was such as to lead the parties to believe that the chairman of the arbitral tribunal might not be free in his judgment, and thus to create in the mind of the PAD a reasonable doubt as to the independence and impartiality of this arbitrator”.
Analysis of the motivation of the court
Although the Court of Appeal followed the established case-law, it also strengthened the obligation imposed on the arbitrators to disclose potential ties with the parties, and in the present case the counsel of one of the parties.
To determine the extent of the circumstances that have to be disclosed, the court made reference to the ICC Note to Parties that requires that arbitrators reveal any “professional or close personal relationship with counsel to one of the parties or the counsel’s law firm”.
The court also made reference to the well-established principle that, if the relationship does not lead to the creation of reasonable doubt on the independence and impartiality in the parties’ mind, a lack of revelation of close personal ties with one of the parties or his representative will not result in a conclusion that there is a lack of independence or impartiality.
In that regard, the fact that the chairman of the tribunal and one of the arbitrators were both law professors should not have had an impact since this is a well-known fact that did not need to be revealed. This conclusion is in line with existing case-law.
However, in its analysis of the specific circumstances of the case, the court made reference to some extracts of the eulogy given by Thomas Clay in which he mentioned that he consulted the late Emmanuel Gaillard "before making any important choice". The court considered that such an admission "revealed the intensity of a relationship that went beyond mere ordinary friendship".
The court also noted that in the eulogy Thomas Clay not only made reference to the personal ties he had with the late Emmanuel Gaillard, but also mentioned the ongoing arbitral procedure: "I was about to meet with him again in three weeks under his new colours for hearings in which he would act as counsel and I would act as arbitrator, and I was looking forward to hearing again his formidable knife-edge arguments, in which precision and perspective were even more appealing than any spin. This meeting will not take place, nor will our regular meetings.”
The Court of Appeal considered that these circumstances were of such a nature as to "create in the mind of the PAD a reasonable doubt as to the independence and impartiality of this arbitrator".
The review of the court's motivation to set aside the award raises some questions.
First, the statements referred to when analysing the potential lack of impartiality of the arbitrator were made in the context of an eulogy that is empathetic by nature, which the court did not fail to point out "the particular context of this publication [...] involves a degree of emphasis and exaggeration inherent in eulogies”. This specific context should therefore be taken into consideration to potentially minimise their importance.
Most importantly, it appears in this case that what led to the setting aside of the award was ultimately the existence of a friendship between the chairman of the tribunal and the counsel of one of the parties.
If as a result of this decision an arbitrator must reveal the existence of a friendship relationship, the court does not define the extent of the friendship relationship. In short, it begs the following questions: at what point should the relationship be deemed worthy of revelation? To whom should the bond of friendship bind? Should family members or other members of firms also be considered in this regard?
Many questions remain unanswered. Hence, it should be considered that this decision will lead to a duty of revelation that is not clearly defined or limited. At the same time, it should also be kept in mind that the arbitration world is a small one where everyone knows each other, and “friendship” ties can easily appear. At the same time, arbitration is based on trust, and parties nominate arbitrators they know and trust, not because they will be impartial, but because it is preferable to name someone that is reliable and serious.
As a consequence, the strengthening of the obligation of disclosure of arbitrators is a good thing if it increases the confidence of the parties in arbitral justice. But the obligation must be clearly defined and it can be questioned whether the notoriety of the protagonists of this case had an impact on the decision adopted by the Court.
We are curious to know the position that the Court of Cassation will adopt now that an appeal against the decision has been made.
