Challenging the constitution of an arbitral tribunal in an application for annulment

The application for annulment of an arbitral award must not constitute a second way to challenge the constitution of the Arbitral Tribunal by a party who has belatedly challenged an arbitrator (Cour de cassation, 1st Civil chamber, 15 June 2017, no. 16-17108).

 

A telecommunications company and an African state were joint shareholders of a company. A dispute arose between the two shareholders.A telecommunications company and an African state were joint shareholders of a company. A dispute arose between the two shareholders.
The telecommunications company seized the International Chamber of Commerce by making a request for arbitration. The President of the Arbitral Tribunal stated in his declaration of independence of 14 July 2013 that he didn’t have to disclose any fact or circumstance likely to call in question his independence or to raise a reasonable doubt in the minds of the parties as to his impartiality.
The telecommunications company’ lawyer informed the other party on 21 August 2013 that the President of the Arbitral Tribunal had been appointed arbitrator by the ICC in a previous case involving the holding company of the telecommunication company.
On 24 October 2013, the State signed the Terms of Reference (article 23 of ICC rules). The terms of reference under the ICC arbitration rules is an important step of the arbitration procedure, which determines the mission of the arbitral tribunal, in particular by determining the parties to the arbitration, the place of arbitration, a statement Summary of the parties’ claims, the list of arbitrators and their contact details, and the rules applicable to the proceedings.
The State made a request for recusal after the terms of reference, on 25 January 2014.
ICC arbitration rules authorize a party to an arbitration to challenge an arbitrator. Article 14 of ICC rules requires that a request to challenge an arbitrator shall be made:

– either within 30 days from receipt by that party of the notification of the appointment or confirmation of the arbitrator,

– or within 30 days from the date when the party making the challenge was informed of the facts and circumstances on which the challenge is based if such date is subsequent to the receipt of such notification.

The Arbitration tribunal has considered in this file that the challenge of arbitrator was filed too late and was therefore inadmissible.

The arbitration proceeding was then continued and an award was made against the African State.

The State decided to request the annulment of the award before the Paris Court of Appeal.

The Paris Court of Appeal dismissed the application for annulment. The Court of Appeal held that the State was deemed to have waived the constitution of the Arbitral Tribunal by the absence of a challenge during the arbitral proceedings.

The matter was then transferred to the Court of Cassation by an appeal from the African State.

The Court of Cassation approved the decision of the Court of Appeal ruling that the Paris Court of Appeal validly held that the action for annulment based on the irregularity of the constitution of the Arbitral Tribunal could not be upheld.

The Court of Cassation gives an additional value to the Terms of reference by considering that this act constitutes the confirmation of the legality of the constitution of the Tribunal and the appointment of the arbitrators.

The Court of Cassation and the Court of Appeal therefore deny that the action for annulment may be a technique to circumvent the time-limits laid down by the Arbitration Rules in order to request the disqualification of an arbitrator.

Reopening the debate on the challenge of an arbitrator after the end of the arbitration when the causes of this challenge were known during the arbitration would have created an uncertainty that would have weakened the arbitration proceeding.

The solution must therefore be approved. An action for annulment must not be another way to challenge the validity of the Constitution of the Arbitral Tribunal.

The solution adopted by the Court of appeal and Court of Cassation would probably have been different if the cause of the possible challenge had not been discovered later and if the disclosure of that information had not occurred at the beginning of the arbitration proceedings.

 

Article written by Olivier VIBERT

 

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