Opportunity Fund et al. v. Telecom Italia S.p.A. et al

2 May 2024
Paris Court of Appeal
RG no. 21/08610

Division 5 – Chamber 16

FRENCH REPUBLIC
 

IN THE NAME OF THE FRENCH PEOPLE
 

PARIS COURT OF APPEAL
 

International Commercial Chamber
 

DIVISION 5 CHAMBER 16
 

JUDGMENT DATED 2 MARCH 2024
 

(no. 43 /2024, 13 pages)
 

Court file registration number: RG no. 21/08610 – Portalis no. 35L7-V-B7F-CDTTX
 

Decision submitted to the Court: arbitral award issued on 1 September 2016 in Paris administered by the International Court of Arbitration of the International Chamber of Commerce (ICC Case no. 18/711/CA/ASM).
 

APPLICANTS:
 

OPPORTUNITY FUND
 

a company incorporated under Cayman Islands law,
 

c/o MUFG Alternative Fund Services (Cayman) Limited, MUFG House, [Address 6]-[Municipality 2] (CAYMAN ISLANDS)
 

acting through its legal representatives,
 

OPPORTUNITY ASSET MANAGEMENT INC
 

a company incorporated under Cayman Islands law,
 

which has its registered office at [Address 4] – [Municipality 11] (CAYMAN ISLANDS),
 

acting through its legal representatives,
 

OPPORTUNITY EQUITY PARTNERS LTD
 

a company incorporated under Cayman Islands law,
 

which has its registered office at [Address 20], [Municipality 13] (CAYMAN ISLANDS),
 

acting through its legal representatives,
 

OPPORTUNITY ASSET MANAGEMENT LTDA
 

a company incorporated under Brazilian law,
 

which has its registered office at [Address 17] [Municipality 16] (BRAZIL),
 

acting through its legal representatives,
 

OPPORTUNITY HDF PARTICIPAÇOES S.A.
 

formerly BANCO OPPORTUNITY S.A
 

a company incorporated under Brazilian law,
 

which has its registered office at [Address 7], [Municipality 16] (BRAZIL),
 

acting through its legal representatives,
 

PRIME INVESTMENT SERVICES LLC
 

formerly OPPORTUNITY PRIME INVESTMENT SERVICES LTD
 

a company incorporated under Delaware law,
 

which has its registered office at [Address 19], [Municipality 12] (BRAZIL),
 

acting through its legal representatives,
 

OPPORTUNITY ASSET ADMINISTRADORA DE RECUSOS DE TERCEIROS LTDA
 

a company incorporated under Brazilian law,
 

which has its registered office at [Address 7], [Municipality 16] (BRAZIL),
 

acting through its legal representatives,
 

OPPORTUNITY GESTORA DE RECURSOS LTDA
 

a company incorporated under Brazilian law,
 

which has its registered office at [Address 7], [Municipality 16] (BRAZIL),
 

acting through its legal representatives,
 

OPPORTUNITY LOGICA RIO CONSULTORIA E PARTICIPACOES LTDA
 

formerly OPPORTUNITY LOGICA RIO GESTORA DE RECURSOS LTDA
 

a company incorporated under Brazilian law,
 

which has its registered office at [Address 7], [Municipality 16] (BRAZIL),
 

acting through its legal representatives,
 

OPPORTUNITY EQUITY PARTNERS ADMINISTRADORA DE RECURSOS LTDA
 

a company incorporated under Brazilian law,
 

[Address 7], [Municipality 16], BRAZIL
 

acting through its legal representatives,
 

OPP I FUNDO DE INVESTIMENTO EM AÇOES
 

a company incorporated under Brazilian law,
 

which has its registered office at [Address 7], [Municipality 16] (BRAZIL),
 

acting through its legal representatives,
 

LUXOR FUNDO DE INVESTIMENTO MULTIMERCADO
 

a company incorporated under Brazilian law,
 

which has its registered office at [Address 7], [Municipality 16] (BRAZIL),
 

acting through its legal representatives,
 

INTERNATIONAL MARKET INVESTMENTS N.V
 

a company incorporated under the laws of the Netherlands,
 

which has its registered office at [Address 8], [Municipality 1] (THE NETHERLANDS),
 

acting through its legal representatives,
 

Mr [V] [F] [T]
 

born 3 October 1954 in [Municipality 18] (BRAZIL)
 

who resides at [Address 10], [Municipality 16] (BRAZIL),
 

Mr [H] [S]
 

born 17 March 1945 in [Municipality 15] (BRAZIL)
 

who resides at [Address 9], [Municipality 16] (BRAZIL),
 

Applicants’ lawyer for procedural purposes (“avocat postulant”): Luca DE MARIA of SELARL PELLERIN – DE MARIA – GUERRE, a lawyer admitted to the PARIS bar, box: L0018
 

Lawyers making submissions for the Applicants: Ms Yas BANIFATEMI and Mr Thomas PARIGOT of GAILLARD BANIFATEMI SHELBAYA DISPUTES, lawyers admitted to the PARIS bar, box: R257
 

RESPONDENTS:
 

TELECOM ITALIA S.P.A.
 

a company incorporated under Italian law,
 

which has its registered office at [Address 21], [Municipality 5] (ITALY),
 

acting through its legal representatives,
 

TELECOM ITALIA FINANCE S.A.
 

a public limited company (société anonyme) under Luxembourg law,
 

which has its registered office at [Address 3], [Municipality 14] (GRAND DUCHY OF LUXEMBOURG)
 

acting through its legal representatives,
 

Respondents’ lawyer for procedural purposes (“avocat postulant”): Mr Benjamin MOISAN of SELARL BAECHLIN MOISAN Associés, a lawyer admitted to the PARIS bar, box: L34
 

Lawyers making submissions for the Respondents: Mr Jean-Yves GARAUD and Mr Guillaume DE RANCOURT of CLEARY GOTTLIEB STEEN & HAMILTON LLP, lawyers admitted to the PARIS bar, box: J021
 

COMPOSITION OF THE COURT:
 

The case was heard on 8 January 2024, in a hearing open to the public, before a Court composed of:
 

Mr Daniel BARLOW, Chamber Presiding Judge
 

Ms Fabienne SCHALLER, Chamber Presiding Judge
 

Ms Laure ALDEBERT, Judge
 

who have held deliberations regarding it.
 

A report was presented at the hearing by Mr Daniel Barlow in accordance with Article 804 of the Civil Procedure Code.
 

Clerk during the hearing: Ms Najma EL FARISSI
 

JUDGMENT:
 

– issued following a process in which both sides were heard
 

– delivered publicly by making the judgment available at the Court registry, with prior notice to the parties in accordance with the terms of the second paragraph of Article 450 of the French Civil Procedure Code.
 

– signed by Daniel BARLOW, Chamber Presiding Judge and by Najma EL FARISSI, Clerk, to whom the signatory judge provided the original of the decision.

Summary of the dispute

* *
 

*
 

I/ FACTS AND PROCEDURAL STEPS
 

1. The Court is seised of an application to set aside a final award issued in Paris on 1 September 2016 in an arbitration administered by the International Court of Arbitration of the International Chamber of Commerce in Paris (the “ICC”), in a dispute between:
 

– on the one hand, a group of entities known as “Opportunity” and their founders, Mr [V] [T] and Mr [H] [S] (“Opportunity” or the “Applicants”),
 

– on the other hand, Telecom Italia S.P.A. and Telecom Italia International NV, now Telecom Italia Finance SA (“Telecom Italia” or the “Respondents”).
 

2. The arbitration arose from the conclusion and implementation of a settlement agreement entered into by the parties on 28 April 2005 in order to settle disputes arising from their joint participation in a consortium set up to promote their investments in the Brazilian telecommunications market.
 

3. In the 1990s, Brazil decided to privatise some of its public companies, particularly in the telecommunications sector. In this context, Mr [T] set up a consortium to bid for the public sector contract for fixed-line telephone services in Brazil’s Region II. This consortium included Opportunity and several associated investors, as well as Citibank and Brazilian public company pension funds. Telecom Italia subsequently joined it.
 

4. On 29 July 1998, the consortium was awarded telecommunications company Tele Centro Sul Participações SA, renamed Brasil Telecom Participações SA (“BTP”). BTP assumed control of Brasil Telecom, the carrier that controlled the landline telephone market in Brazil’s Region II. This investment was made through Solpart Participações SA (“Solpart”). The consortium entered into a shareholders’ agreement, the “Solpart Shareholders' Agreement”, for this purpose.
 

5. The relationship between the consortium members quickly deteriorated as regards the strategic direction and control of Brasil Telecom.
 

6. The first disagreement arose when Brasil Telecom acquired Companhia Riograndese de Telecomunicações (“CRT”), owned by Telefónica. Opportunity accused Telecom Italia of putting its own interests ahead of Brasil Telecom’s by colluding with Telefónica to increase the price of CRT.
 

7. Another dispute arose concerning Brasil Telecom’s proposal to take part in an auction on 24 January 2001 to acquire a mobile telephone carrier licence in Brazil's Region II. Opportunity alleged that Telecom Italia had obstructed Brasil Telecom’s bid, to the benefit of one of its subsidiaries, TIM Participações SA.
 

8. As a result of this transaction, Telecom Italia came to hold more than 20% of the capital and voting rights of a fixed-line telephone services provider, which was not permitted under Brazilian law. Telecom Italia thus sold part of its stake in Brasil Telecom to other members of the consortium, with a right to buy back its shares once the regulatory hurdle had been cleared.
 

9. When Telecom Italia sought to buy back its shares in 2003, Opportunity brought an arbitration proceeding in London seeking a decision restraining it from exercising its option. Telecom Italia applied to the Commercial Court of Rio de Janeiro for an interim order against Opportunity to enforce the agreed buy-back option.
 

10. The Brazilian telecommunications regulatory authority (ANATEL) issued a favourable opinion on the transaction on 16 January 2004, granting an 18-month period for the parties’ disputes over overlapping licences to be resolved. In turn, on 17 March 2004, the Brazilian competition authority (CADE) ordered Telecom Italia not to return to the group controlling Brasil Telecom, but reversed its decision on 30 June 2004.
 

11. Against this backdrop, Opportunity accuses Telecom Italia of having engaged in corruption and influence peddling to rally political forces in the Brazilian government (“macro-corruption”), as well as various agents, police officials, judges and journalists (“micro-corruption”) to carry out an extortion campaign against it so that it could gain control of Brasil Telecom. Opportunity alleges, among other things, that Telecom Italia orchestrated a police operation, Operation Chacal (“Operation Jackal”), instigated improper proceedings, sabotaged Opportunity’s relationships with its partners and manipulated several Brazilian media outlets into waging a defamatory campaign against it and Mr [T].
 

12. Telecom Italia denies these allegations and accuses Opportunity of having carried out a large-scale illegal surveillance operation on its business, known as “Project Tokyo", which led the Brazilian police to investigate Opportunity’s unlawful conduct. Telecom also asserts that Opportunity sabotaged its own relationships with its business partners and that those judges who have had to consider Mr. [T]'s conduct found that he lacked credibility.
 

13. Following lengthy and conflict-ridden discussions and after exchanging various drafts, the parties entered into a series of settlement agreements on 28 April 2005, including the Opportunity Settlement Agreement (“OSA”). Under the OSA, Opportunity and Telecom Italia agreed to settle their disputes in exchange for Telecom Italia paying 65 million dollars to Opportunity.
 

14. On 23 May 2012, Opportunity brought an arbitration proceeding against Telecom Italia before the ICC in Paris, pursuant to the arbitration clause set out in section 9.11 of the OSA. Opportunity alleged that the OSA had been procured by violence and fraud perpetrated by Telecom Italia, and further that Telecom Italia had breached the OSA.
 

15. In a final award rendered in Paris on 1 September 2016, the arbitral tribunal ruled as follows:
 

“For the reasons set out above, the Tribunal:
 

(1) Dismisses the Respondents' jurisdictional and admissibility objections;
 

(2) Dismisses the Respondents’ limitations objection;
 

(3) Dismisses the Claimants’ claims in their entirety;
 

(4) Dismisses the Respondents’ counterclaims in their entirety;
 

(5) Orders that each of the Parties shall bear its own legal expenses and expert fees;
 

(6) Orders that each of the Parties shall bear half of the ICC’s administrative costs and the Tribunal’s costs and expenses fixed by the ICC Court at its 4 August 2016 session;
 

(7) Dismisses all other requests and claims.”
 

16. On 5 December 2016, Opportunity brought an application to set aside the award, which is at issue in this proceeding.
 

17. On 22 October 2017, Opportunity filed an application for revision of the award with the ICC International Court of Arbitration, alleging that Telecom Italia had committed fraud in the arbitration process.
 

18. On 5 March 2018, Opportunity successfully challenged the president of the arbitral tribunal, Ms [P] [N]. The following day, the co-arbitrator appointed by Opportunity, Mr. [R] [O], resigned. Opportunity appointed Mr [K] [U] as co-arbitrator. Ms [M] [D] was appointed as the new president of the arbitral tribunal.
 

19. On 15 November 2018, at Telecom Italia’s request, the Court of Appeal suspended its decision on the set-aside application pending the arbitral tribunal rendering an award in the revision application.
 

20. On 24 August 2020, the arbitral tribunal issued the revision award, in which it unanimously dismissed the revision application.
 

21. Opportunity filed an application to set aside the revision award on 3 December 2020 (proceeding registered under no. RG 20/17575).
 

22. On 15 June 2021, the first set-aside application was reassigned to the Court of Appeal's International Chamber (proceeding registered under this RG number).
 

23. The pre-merits-hearing phase was ordered closed on 5 December 2023, and an oral hearing took place on 8 January 2024.
 

24. Through their submissions on a motion dated 8 January 2024, the Applicants requests that the order declaring the pre-merits-hearing phase closed be set aside [translator’s note: referred to below as the “closing order”, “ordonnance de clôture” in French). The Respondents opposed the motion in submissions dated the same day.
 

II/ PARTIES’ SUBMISSIONS
 

A. Procedural submissions
 

25. In their procedural submissions seeking set-aside of the closing order, the Opportunity entities, Mr [T] and Mr [S] request, pursuant to Article 6(1) of the ECHR and Articles 15, 16 and 803 of the Civil Procedure Code, that the Court:
 

- Set aside the closing order issued on 5 December 2024;
 

- Dismiss any claim by Telecom Italia that is inconsistent with this request.
 

26. In its procedural submissions submitted the same day, Telecom Italia requested that the Court dismiss Opportunity’s application to set aside the closing order, pursuant to Article 803 of the Civil Procedure Code.
 

B. Submissions on the merits
 

27. In their summary submissions served electronically on 5 November 2023, the Opportunity entities, Mr [T] and Mr [S] requested, pursuant to Articles 1518 and following of the Civil Procedure Code, in particular Article 1520(2), (4) and (5), and Article 700 of the Civil Procedure Code, that the Court:
 

- set aside the award rendered on 1 September 2016 in ICC Case no. 18711/CA/ASM;
 

- order Telecom Italia International N.V. and Telecom Italia S.p.A. to pay EUR 300,000 under Article 700 of the Civil Procedure Code; and
 

- order Telecom Italia International N.V. and Telecom Italia S.p.A. to pay full costs.
 

28. In their summary submissions served electronically on 30 November 2023, the Telecom Italia companies request that the Court:
 

- declare and decide that the Applicants' application to set aside the first award rendered in Paris on 1 September 2016 is without merit;
 

- as a result, dismiss the set-aside application and dismiss all the Applicants’ claims;
 

- in any event, order the Applicants to pay EUR 350,000 to the Respondents pursuant to Article 700 of the Civil Procedure Code; and
 

- order the Applicants to pay full costs, payable directly to Selarl Baechlin Moisan pursuant to Article 699 of the Civil Procedure Code.
 

III/ REASONS FOR THE DECISION
 

A. On the request to set aside the closing order
 

29. Opportunity seeks to have the closing order set aside on the grounds that:
 

- on 4 December 2023, it submitted into the record a police report that contained information that was particularly relevant to the Court;
 

- given the date on which it was issued, it was not possible to obtain and submit a translation of this document into French until 8 December 2023, i.e. after the pre-merits-hearing phase was ordered closed;
 

- it has already been established that an exhibit submitted into the record after the pre-merits-hearing phase was ordered closed may be admitted, provided that the other party has had the opportunity to make submissions regarding it;
 

- the report is directly related to the facts that Opportunity complains of and supports its position;
 

- the translation cannot be considered separately from the document and does not contain any additional information; it is a complementary document that could not have been submitted before the pre-merits hearing phase was ordered closed;
 

- Telecom Italia has not stated at any time that it would need to respond to it or to submit exhibits in a timeframe that would be incompatible with the oral hearing date; and
 

- the submission of the translation, which could not have been submitted before the pre-merits-hearing phase was ordered closed, is a serious ground warranting that the closing order be set aside, because it provides an indispensable additional means of understanding an exhibit that is relevant to the arguments.
 

30. Telecom Italia opposes this request, arguing that Opportunity cannot show any serious grounds, much less any serious grounds that only became known after the closing order.

Reasons

GIVEN THE ABOVE:
 

31. Under Article 802 of the Civil Procedure Code, no written submissions or exhibits may be submitted into the record after a closing order is issued. Such submissions or exhibits will be declared inadmissible by the court on its own motion. This principle may only be deviated from in applications for voluntary intervention, submissions relating to accrued rent, arrears, interest and other ancillary costs and disbursements made up to the opening of oral argument, requests to set aside a closing order, and submissions requesting that the proceeding be resumed.
 

32. Article 803 of the Civil Procedure Code provides that a closing order may only be set aside if a serious ground arises after the order was issued.
 

33. In this case, the Applicants request that the closing order be set aside so that they may submit into the record a translation of an exhibit that was filed in Portuguese the day before the order was issued.
 

34. However, a review of the file shows that the Applicants did not cite this exhibit in their summary submissions, which were served before it was submitted.
 

35. When asked about this, the Applicants stated that they did not intend to make any submissions on this document if the translation were to be admitted into the record.
 

36. Thus, even though the closing of the pre-merits-hearing phase was postponed several times at their request, they cannot show any serious cause for setting aside the closing order.
 

37. Their request to this effect must therefore be dismissed.
 

B. On the merits
 

38. The Applicants raise three grounds for set-aside: first, that the arbitral tribunal was improperly constituted; second, that the recognition or enforcement of the award would be contrary to international public policy; and third, that the principle that the parties be able to present their case and that of equality of arms was breached.
 

Regarding the first ground, as to whether the arbitral tribunal was improperly constituted:
 

39. Opportunity asserts that the arbitral tribunal was improperly constituted, by arguing that:
 

- during the revision application, Opportunity discovered close and ongoing business ties between Telecom Italia and the law firm in which the president of the arbitral tribunal is a partner;
 

- these ties led to the ICC upholding the challenge to the president, and were already present, but not disclosed, during the arbitration at issue;
 

- Gide has worked for Vivendi and its subsidiaries on an ongoing basis since at least 2013, and this business relationship continues to this day;
 

- the president stressed how important this client is to her firm, and reserved the firm’s right to develop this relationship in the future;
 

- Vivendi became Telecom Italia’s largest shareholder on 24 June 2015, and the ties between the companies became closer while deliberations were underway;
 

- at the time of the final award, Vivendi had a material interest of 24.68% in Telecom Italia’s share capital, which gave Vivendi a material financial interest in the outcome of the dispute even though its interest was not a controlling one, and thus made it an interested third party to the arbitration;
 

- given the absence of any statement to the contrary by the president of the arbitral tribunal, she was aware of the existing ties between Gide, Vivendi and Telecom Italia, or must be deemed to have been aware of them;
 

- the importance that Vivendi has for Gide is demonstrated not only by the recurring nature of Gide’s services to Vivendi, but also by the president's statement that, despite the existing ties between Vivendi and one of the parties to the arbitration before her, her firm intended to prioritise its relationship with Vivendi by continuing to provide services to it in the future;
 

- these ties are such as to give rise to a reasonable doubt in the minds of the parties as to the independence and impartiality of the president of the arbitral tribunal;
 

- this reasonable doubt was recognised by the ICC, which upheld the challenge to the president in the context of the application for revision of the award on the grounds that the ties were “sufficiently significant to objectively give rise to a conflict situation”;
 

- the arbitral tribunal was therefore improperly constituted and the final award must be set aside pursuant to Article 1520(2) of the Civil Procedure Code.
 

40. Telecom Italia replies that:
 

- none of the facts that Opportunity puts forward is such as to raise in the mind of a reasonable observer any doubt as to the independence and impartiality of the president of the arbitral tribunal;
 

- in determining whether the arbitrator is in a conflict of interest, the judge must assess the specific circumstances of the case in a practical and objective manner;
 

- in this case, an objective assessment leads to the conclusion that, during the arbitration, Vivendi did not exercise any de jure or de facto control over Telecom Italia, and therefore Vivendi cannot be considered an interested third party to the arbitration;
 

- under Italian law, Vivendi did not exercise management and control over Telecom Italia until 2017, i.e. after the award was rendered;
 

- the fact that Vivendi did not control Telecom Italia is all the more obvious given that, during the arbitration, the two companies had a particularly conflict-ridden and hostile relationship;
 

- the ICC Court's decision dealt with the appearance of independence and impartiality on the part of the president for the future, since the facts based on which the challenge was upheld arose after the award was rendered;
 

- even assuming that Vivendi is an interested third party to the arbitration, there is no objective basis on which a third party could reasonably doubt the president's independence and impartiality;
 

- indeed, the ties between Gide and Vivendi were particularly tenuous, as Gide received a total of only EUR 16,473 from Vivendi and its subsidiaries in 2017, representing 0.0092% of its annual revenue;
 

- these ties were indirect in two respects, since they related to the president's firm, not the president, and involved a third-party company, not Telecom Italia;
 

- the president was never personally involved in the matters in which her firm acted for Vivendi or its subsidiaries and did not have access to confidential information that could have affected her judgment in the arbitration;
 

- she did not breach her disclosure obligations, as she only became aware in 2017 of the ties in question;
 

- the ground for set-aside asserting that the tribunal was improperly constituted is therefore without merit.
 

GIVEN THE ABOVE:
 

41. Under Article 1520(2) of the Civil Procedure Code, a set-aside application may be brought where the tribunal was improperly constituted.
 

42. Assessing an arbitrator’s independence and impartiality falls within the purview of the court empowered to determine whether an arbitral award was properly rendered. That court must consider any circumstances that are such as to affect the arbitrator’s judgement and to give rise to a reasonable doubt in the minds of the parties as to the arbitrator’s independence and impartiality – attributes at the very core of an arbitrator’s role.
 

43. Independence is assessed through an objective approach that involves identifying specific, provable facts that are external to the arbitrator and that could affect the arbitrator’s ability to decide freely, such as personal, professional or financial ties with one of the parties.
 

44. Arbitrator impartiality, in turn, requires that there be no preconceptions or biases that could affect the arbitrator’s judgment. These may arise from a number of factors, such as the arbitrator’s nationality or social, cultural or legal background.
 

45. In this case, the arguments and exhibits submitted into the record show that:
 

- the arbitration leading to the award which is at issue in this application began on 21 May 2012 and ended on 1 September 2016;
 

- in the context of Opportunity's application for revision of the award dated 22 October 2017, Telecom Italia disclosed in its written submissions that it was under the management and coordination of Vivendi SA within the meaning of Article 2497 of the Italian Civil Code;
 

- after Opportunity invited the members of the arbitral tribunal to consider this circumstance in determining whether it was necessary to update their statements of independence and impartiality, the president of that tribunal informed the parties, in a statement dated 21 December 2017, that she had “never acted either as counsel or as arbitrator in a case involving Vivendi SA or its subsidiaries”;
 

- that statement shows, as regards the firm of which the president was a partner, that:
 

-- Gide’s finance team acts as regular counsel to the banks on Vivendi's bond offerings;
 

-- Gide has acted for and advised Canal+ and its subsidiaries (which is a member of the same group of companies as Vivendi);
 

-- Vivendi or members of the same group of companies also appear in Gide’s database as clients or adverse parties in unrelated matters, most of which have been inactive since 2013;
 

-- Gide acted for various channels in negotiations or disputes with Canal+, Canal+ Distribution or Canal Sat (the most recent file was closed in 2015);
 

-- Gide acted for former shareholders of a company in an action brought by Vivendi regarding a representation and warranty agreement relating to the sale of that company, which file was closed in January 2017;
 

Gide's Warsaw office represented Canal+ before the Polish Office of Competition and Consumer Protection (the file was closed in 2017).
 

- the president stated that she was not involved in any of these cases, but notes that Gide partners may be doing other work for or against Vivendi SA or members of its corporate groups; and
 

- by a decision dated 5 March 2018, the ICC International Court of Arbitration upheld Opportunity’s challenge of the president.
 

46. This decision stated, in particular, that:
 

“Vivendi’s association with Telecom Italia is sufficiently significant to objectively give rise to a conflict situation preventing [the president] from continuing to preside the arbitral tribunal. However, the Court is of the view that whether or not the Respondents can be characterised as Vivendi subsidiaries is irrelevant. The fact remains that Vivendi exercised relevant control over Telecom Italia. The following facts (considered collectively) make this clear:
 

(i) Telecom Italia is subject to the management and coordination of Vivendi in accordance with Article 2497 of the Italian Civil Code;
 

(ii) Vivendi is the largest single shareholder with a 23.943% interest in Telecom Italia’s share capital;
 

(iii) Italy’s National Companies and Stock Exchange Commission (Commissione Nazionale per le Società e la Borsa), an independent, official organisation, found in September 2017 that Vivendi exercised de facto control over Telecom Italia. In this regard, the Court also noted that, according to the Respondents, the decision was appealed; and
 

(iv) Vivendi appointed 10 of the 15 members of Telecom Italia's board of directors in May 2017."
 

47. It further held that:
 

“while the significance (or insignificance) of the revenue generated by a client for a firm is not, in itself, determinative of the materiality of a relationship between Vivendi and the Respondents, the relevant facts are as follows:
 

(i) between 2013 and 2017, [the president's] law firm (Gide) did work for Vivendi regularly; and
 

(ii) Gide has clearly reserved the right to continue to act for Vivendi and its affiliates (even during the revision proceeding and throughout the proceeding), which, regardless of the revenue generated for Gide, shows that Gide considers that its relationship with Vivendi has material importance and value.
 

[--] all of the above appears to be a sufficiently close tie between Vivendi and the Respondents, and such facts raise a “reasonable” doubt as to [the president's] independence and impartiality within the meaning of Article 14 of the Rules, which does not require a finding that the president is partial or lacks independence, especially since Gide has reserved the right to continue to act for Vivendi and its affiliates in the context of the revision application and in the future”.
 

48. While there is no debate between the parties as to the requirements and grounds for this challenge, they disagree as to whether the existing ties between Vivendi and Telecom Italia and Vivendi’s significance as a Gide client should be taken into consideration. They also disagree about the implications of those facts on whether the arbitration and the award at issue in this application were proper.
 

49. In this regard, as to the ties between the two companies, the Court finds that:
 

- the exhibits submitted into the record show that Vivendi acquired a material interest in Telecom Italia’s share capital in 2015;
 

- in a 25 June 2015 press release, Vivendi announced that it had become Telecom Italia’s “largest shareholder”, that it held 14.9% of the company’s common shares, and that it “intends to support Telecom Italia over the long term”;
 

- according to a 17 November 2015 press release, this interest had risen to 20.12%, and was expected to reach 24.9% in March 2016, while the arbitration at issue was still pending; and
 

- in December 2015, Vivendi appointed four directors to Telecom Italia’s board of directors, and the chair of its management board was appointed vice-chair of Telecom Italia’s board of directors on 27 April 2016.
 

50. The significance of this shareholding, together with Vivendi’s direct involvement in the governance of Telecom Italia while the arbitration at issue was ongoing, show that Vivendi had a clear interest in the outcome of the arbitration, regardless of whether there was a relationship of control within the legal meaning of the term. The financial stakes of the arbitration cannot be held to be immaterial to Vivendi, given that the claims made against Telecom Italia amounted to several billion dollars.
 

51. Moreover, the statement provided by the president of the arbitral tribunal during the revision proceeding and the ICC’s findings made regarding the challenge, referred to above, show that the law firm of which the president was a partner acted on several occasions as counsel for Vivendi and its subsidiaries both before and during the arbitration that is at issue in this application.
 

52. Telecom Italia notes that the fees for these services are modest relative to the firm’s overall revenue. But the recurring nature of these services, which extended beyond Vivendi to the entire group under its control, as well as the stakes involved for the firm in having such a major client, attest to the significance and materiality of this relationship. This is confirmed by the firm’s decision, when its partner was challenged, to prioritise pursuing this business stream despite the arbitration. The Court notes that, even though this intention was only expressed in 2017, during the revision application, the financial conditions for this collaboration were already in place and firmly established during the arbitration at issue in this proceeding.
 

53. The existence of such ties between a third party with an interest in the arbitration and the law firm in which the arbitrator practises as a partner is such as to affect the arbitrator’s independence.
 

54. Indeed, while the integrity of the president of the arbitral tribunal is not in doubt in this case, these ties nevertheless give rise to an objective conflict of interest such as to give rise to a reasonable doubt in the minds of the parties as to the arbitrator’s independence.
 

55. In these circumstances, the ground for set aside based on the arbitral tribunal being improperly constituted is allowed, and the award is set aside on this ground.
 

C. On costs and expenses
 

56. The Telecom Italia companies are the unsuccessful parties, and will be ordered to pay costs. Their request under Article 700 of the Civil Procedure Code is dismissed.
 

57. They will also be ordered, jointly and severally, to pay the Respondents [sic] the amount of EUR 100,000 pursuant to that Article.
 

IV/ OPERATIVE PROVISION
 

Operative provision

For these reasons, the Court:
 

1) Sets aside the award rendered on 1 September 2016 in ICC Case no. 18711/CA/ASM;
 

2) Orders Telecom Italia International N.V. and Telecom Italia S.p.A. jointly and severally to pay to the Respondents [sic] a total of one hundred thousand euros (EUR 100,000.00) pursuant to Article 700 of the French Civil Procedure Code; and
 

3) Orders Telecom Italia International N.V. and Telecom Italia S.p.A. to pay full costs.
 

THE CLERK, THE PRESIDING JUDGE,

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