Port Autonome de Douala v. Douala Int'l Terminal S.A.

The French Court of Cassation (France's Supreme Court) upheld the Paris Court of Appeal's decision setting aside an arbitral award rendered by a three-arbitrator tribunal based on doubts as to the impartiality of the presiding arbitrator (Thomas Clay) arising from a eulogy he gave of the lead counsel for one of the parties (Prof. Emmanuel Gaillard),  which revealed that they were close personal friends and that the presiding arbitrator consulted the counsel before making any important decision. 

Original decision: Cour de cassation

Our translation of the Paris Court of Appeal's decision is available here 

19 June 2024
French Court of Cassation
Appeal no. 23-10.972

First Civil Chamber - Section panel

ECLI:FR:CCASS:2024:C100345

Headings and summaries

ARBITRATION

A publication by the president of an arbitral tribunal, which refers to close personal ties with a party's counsel, is an objective fact such as to give rise to reasonable doubt in the mind of the other party as to the arbitrator's independence and impartiality. Accordingly, pursuant to Article 1520(2) of the French Civil Procedure Code, it is lawful for an appellate court to set aside an arbitral award where, after taking into account the degree of emphasis and exaggeration inherent in the particular context of a eulogy, it finds that other passages in the text are of a more personal nature, suggesting that a friendship existed that transcended social interaction in academic circles, and show a connection between the existence of these close personal ties and the pending arbitration proceeding, such as to suggest to the parties that the president of the arbitral tribunal might not be able to decide freely.

Decision text

Heading

CIV. 1
 

MY1
 

COURT OF CASSATION
______________________
 

Public hearing of 19 June 2024
 

Dismissal
 

Ms CHAMPALAUNE, presiding judge
 

Decision no. 345 FS-B
 

Appeal no. B 23-10.972
 

F R E N C H  R E P U B L I C
 

_________________________
 

IN THE NAME OF THE FRENCH PEOPLE
_________________________
 

DECISION OF THE COURT OF CASSATION, FIRST CIVIL CHAMBER, 19 JUNE 2024
 

[Municipality 2] International Terminal (DIT), a company incorporated under Cameroonian law, whose registered office is at [Address 3] (Cameroon), brought appeal no. B 23-10.972 against two judgments issued on 10 May 2022 and 10 January 2023 by the Paris Court of Appeal (Division 5, Chamber 16), in the dispute between it and Port Autonome de [Municipality 2], whose registered office is at [Address 1], the respondent to this appeal.
 

The appellant raises two grounds in support of its appeal.
 

The file has been provided to the principal public prosecutor.
 

Based on the report of Ms Tréard, judge, the submissions of SARL Ortscheidt, counsel for [Municipality 2] International Terminal, SCP Lyon-Caen et Thiriez, counsel for Port Autonome de [Municipality 2] (PAD), and the opinion of Mr Salomon, advocate general, after oral argument at the public hearing on 7 May 2024 at which were present Ms Champalaune, presiding judge, Ms Tréard, judge rapporteur, Ms Guihal, senior judge, Mr Bruyère, Ms Peyregne-Wable, Ms Tréard and Ms Corneloup, judges, Ms Kloda, consulting judge (conseiller référendaire), Mr Salomon, advocate general, and Ms Vignes, chamber clerk, the First Civil Chamber of the Court of Cassation, composed, pursuant to Article R. 431-5 of the Courts Organisation Code, of the presiding judge and judges referred to above, after having deliberated as provided for by law, rendered this decision.
 

Partially withdrawn 

1. The Court acknowledges that [Municipality 2] International Terminal has withdrawn its appeal against the Paris Court of Appeal's decision of 10 May 2022 (RG no. 22/00144).

 

Summary of the dispute

I/ FACTS AND PROCEDURAL STEPS
 

2. According to the impugned decision (Paris, 10 January 2023), by an agreement dated 28 June 2004, Port Autonome de [Municipality 2] (PAD), a public limited company in which Cameroon was the sole shareholder, awarded the management and operation of a terminal in the port of [Municipality 2] (Cameroon) to Cameroonian company [Municipality 2] International Terminal (DIT).
 

3. DIT brought an arbitration before the International Chamber of Commerce in Paris (the "ICC") pursuant to the arbitration clause in the agreement.
 

4. On 14 April 2019, the president of the arbitral tribunal, appointed by the co-arbitrators chosen by the parties, signed a statement of independence.
 

5. A partial award was rendered in Paris on 10 November 2020. PAD applied to set aside the partial award on 14 December 2020.
 

6. As the proceeding continued before the same arbitral tribunal on other issues that remained in dispute, on 20 April 2021, PAD submitted to the ICC Secretariat a challenge to the president of the arbitral tribunal, based on the contents of the eulogy he had just given for Emmanuel Gaillard, DIT's lawyer, who passed away on 1 April 2021, which appeared in a legal journal on 15 April 2021. This challenge was dismissed on 12 May 2021.

 

Grounds

Review of the grounds
 

Second ground, second and third parts

Reasons

7. Pursuant to Article 1014(2) of the French Civil Procedure Code, there is no need to give a specifically reasoned decision on this ground, which is patently not capable of resulting in the underlying decision being quashed.

Grounds

First ground
 

Description of the ground
 

8. DIT complains that the decision set aside the partial award and ordered it to pay a certain amount of money to PAD pursuant to Article 700 of the French Civil Procedure Code, stating:
 

“1) that a party that knowingly fails to exercise its right to challenge an arbitrator within the time limit provided for in the applicable arbitration rules, on the basis of any circumstance such as to call into question the independence or impartiality of an arbitrator, shall be deemed to have waived its right to do so before the court hearing a set-aside application; that by deciding as it did after finding that PAD “argues that the president of the arbitral tribunal failed to make a number of disclosures about facts that were not public knowledge in his statement of independence, and that it was only when it became aware of the eulogy that the president wrote to honour [L] [F], counsel for the opposing party, in April 2021 after he passed away suddenly, that doubts about the president’s impartiality became a certainty”, without making a finding as to whether PAD had exercised its right to challenge within the 30-day period allowed by the applicable ICC Rules of Arbitration following the date on which it was informed of the facts and circumstances that caused it to doubt the arbitrator's independence and impartiality before the award was published, the Court of Appeal erred in law under Articles 1456(2), 1466, 1506(2), 1506(3) and 1520(2) of the French Civil Procedure Code;
 

2) that, in support of its challenge filed with the ICC International Court of Arbitration on 20 April 2021, PAD explicitly argued “that counsel for Port Autonome de [S] have already raised a red flag by informing Professor [A] [R] that he was not independent in presiding over the Arbitral Tribunal”, that "in correspondence dated 12 February 2020, PAD's counsel stated that ‘Port Autonome de [S] regrets that the conduct of the proceedings as they stand raises legitimate doubts as to the impartiality and independence of the President of the Arbitral Tribunal, whose conduct amounts to unequal treatment of the Parties or to a lack of neutrality on the part of the President of the Tribunal, and calls for the equitable treatment of the Parties to be restored’”, and that "PAD had held off on challenging him, hoping that he would come to realise his duties after this exchange. Unfortunately, he continued to pursue this nefarious course of action because of his relationship with Professor [L] [F] and his team, which PAD did not find out about until after the 15 April 2021 eulogy. "Professor [A] [R]'s lack of neutrality continued throughout the proceedings, as can be seen from the transcript of the 2 July 2020 hearing, at which it was Professor [L] [F] and counsel [G] [U] who steered the arguments"; in ruling as it did, on the grounds "that the doubts thus raised by PAD as to the arbitrator's independence and impartiality relate to facts that came to light after the arbitral award was rendered, the company cannot be deemed to have waived its right to rely on them during the arbitral proceeding, such that the ground must be held to be admissible before the court hearing the set-aside application", when, according to the challenge referred to in the decision, PAD had doubts about the independence of the president of the arbitral tribunal due to alleged ties with DIT's counsel several months before the 15 April 2021 eulogy and had not challenged him, the Court of Appeal disregarded the subject-matter of the dispute contrary to Article 4 of the French Civil Procedure Code.

 

Reasons

The Court's analysis
 

9. The Court of Appeal noted that the claim before it, based on the arbitral tribunal being improperly constituted, was governed by Article 1466 of the French Civil Procedure Code. It then stated that the breach of the relevant disclosure obligation, relating to the friendship between the president of the arbitral tribunal and counsel for one of the parties, had come to light on 15 April 2021, when the president's eulogy for counsel for the other party was published, as these ties had not been disclosed previously.
 

10. It concluded that since these facts had come to light after the partial award had been rendered, PAD could not be deemed to have waived its right to rely on them, with the result that the ground had to be held admissible before the court hearing the set-aside application.
 

11. The Court of Appeal had full powers to make these findings and draw this conclusion, and thus it is irrelevant that facts casting doubt on the president's impartiality in the conduct of the arbitration proceedings, other than those revealed in the eulogy, had been mentioned in a letter dated 12 February 2020. Given this, the Court of Appeal did not err in law, as it was not required to conduct the unnecessary enquiry referred to in the first part, and did not disregard the subject-matter of the dispute.

 

Grounds

The first, fourth and fifth parts of the second ground
 

Description of the ground
 

12. DIT raises the same complaint against the decision, stating:
 

“1/ that an arbitrator’s lack of independence is assessed through an objective approach that involves identifying specific, provable factors that are external to the arbitrator and that could affect the arbitrator’s ability to decide freely, such as personal, professional and/or financial ties with one of the parties or its counsel; that, by relying solely on the statements of the president of the arbitral tribunal taken from the eulogy he wrote after the sudden death of counsel for one of the parties, who was a respected figure in arbitration law, to conclude that there was a close personal relationship between them, which he was required to mention in his statement of acceptance and independence, and to set aside the award on the ground that the fact that this statement established a link between the existence of these personal ties and the ongoing arbitration proceeding between the same parties, combined with the statement that he consulted him before making any important decision, is a circumstance such as to lead the parties to believe that the arbitrator might not be able to decide freely and thus to raise a reasonable doubt in PAD's mind as to his independence and impartiality, after having noted, firstly, that these two law professors had academic ties that by their nature need not be disclosed, and the degree of emphasis and exaggeration inherent to eulogies, and, and, secondly, that the arbitrator had specified in a letter written to the ICC in 2021 that he had not seen the deceased alone since 2019 and had never in his career consulted him on the decisions to be made regarding arbitration, without noting that there were other precise and verifiable facts external to the arbitrator that established the existence and nature of the relationship extolled in the eulogy and then denied by the arbitrator, which DIT complained of, the Court of Appeal erred in law under Articles 1456(2), 1506(2), and 1520(2) of the French Civil Procedure Code;
 

4/ that courts may not allow or reject claims before them without reviewing all the evidence submitted to them by the parties in support of their arguments; that, in submitting that the ground for set-aside based on the lack of independence and impartiality of the president of the arbitral tribunal because of the alleged existence of close ties with its counsel, DIT relied on a letter from this arbitrator to the ICC International Court of Arbitration's Secretariat dated 5 May 2021, in response to PAD's challenge based on his statements taken from the eulogy, in which he admitted that what PAD “describes as having been set out in the eulogy, that is ‘deep friendship, consistent contact and ongoing consultations’ is an inaccurate extrapolation from the eulogy I gave for the late [L] [F], which is not consistent with the facts"; that, by relying solely on the president’s statements taken from the eulogy he wrote after the sudden death of counsel for one of the parties, who was a respected figure in arbitration law, to conclude that there was a close personal relationship between them, which he was required to mention in his statement of acceptance and independence, and set aside the award, without reviewing the arbitrator's letter to the ICC International Court of Arbitration's Secretariat dated 5 May 2021, even on a cursory basis, which letter denied the existence of close personal ties with DIT's counsel, the Court of Appeal breached Article 455 of the French Civil Procedure Code;
 

5/ that courts may not allow or reject claims before them without reviewing all the evidence submitted to them by the parties in support of their arguments; that in submitting that the ground for set-aside based on the lack of independence and impartiality of the president of the arbitral tribunal because of the alleged existence of close ties with its counsel should be dismissed, DIT relied on letters from the co-arbitrators to the ICC International Court of Arbitration Secretariat dated 28 April 2021, in response to PAD's challenge, since Professor [J] stressed that "the president of the arbitral tribunal conducted the proceeding in a completely independent and impartial manner" and Mr [Z] [I] stated that he had "no particular comment on how the proceeding was conducted" and that his "dissenting opinion followed deliberations among the tribunal members", as was his dissenting opinion issued on 10 November 2020, in which he stated that the partial award "is the result of a process that complied with the guiding principles of arbitral proceedings"; that, by relying solely on the president’s statements taken from the eulogy he wrote after the sudden death of counsel for one of the parties, who was a respected figure in arbitration law, to conclude that there was a close personal relationship between them, which he was required to mention in his statement of acceptance and independence, and to set aside the award, without reviewing either of the letters from the co-arbitrators to the ICC International Court of Arbitration's Secretariat dated 28 April 2021 or the dissenting opinion of one of the co-arbitrators dated 10 November 2020, even on a cursory basis, which established that the president of the arbitral tribunal was not dependent on or partial to anyone, the Court of Appeal breached Article 455 of the French Civil Procedure Code.

 

Reasons

The Court's analysis
 

13. After referring to Articles 1520 and 1456(2) of the French Civil Procedure Code, to Article 11 of the ICC Rules (2017 version) to which the arbitration in question was subject, and to the ICC's guidelines for assessing arbitrators' disclosure obligations, the Court held that it follows from these documents that "close professional or personal relationships" between an arbitrator and a party's counsel are special circumstances that arbitrators must take into account when making their statement of independence and throughout the arbitration, and that, apart from these circumstances which are objective factors that must be disclosed, 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 reasonably available information.
 

14. After setting out the contents of the statement of acceptance and independence made by the president of the arbitral tribunal, which does not mention the existence of any particular relationship with counsel for one of the parties, the decision specifies that the professional ties that may exist between lawyers and law professors, particularly in the field of international arbitration, and in particular in academic circles at the doctoral level and for thesis examination committees, in no way imply, by their very nature, that "close" professional or personal relationships exist within the meaning of the ICC guidelines mentioned above, as these relationships can be described as academic or scientific, at their highest.
 

15. The decision finds that the president of the arbitral tribunal had been in regular contact with a party's counsel for several years, but that the academic ties between them did not, by their very nature, have to be disclosed, in accordance with the principles set out.
 

16. The decision states that, in the particular context of a eulogy, the publication in question necessarily contained an element of emphasis and exaggeration, such that the final words ("I admired and loved him") could not reasonably be considered as indicating that the author was beholden to Professor [F], but rather should be understood as a tribute to a respected figure in arbitration law.
 

17. However, the decision notes that other passages of this text are more personal, with the author stating that he consulted Professor [F] “before making any important decision”, and that the deceased, “who rarely did so”, was “opening up” to him, which suggests to the reader that a close friendship existed that extended beyond the bounds of social interaction in academic circles.
 

18. The decision then emphasises that the text at issue establishes a connection between the existence of these close personal ties and the ongoing arbitration, as the author states that he was to meet [L] [F] again in his capacity as a lawyer and that he “was looking forward to hearing again his impressive knife-edge pleadings, where his precision and overreaching vision seduced [...] much more than any histrionic outbursts.”
 

19. The decision concludes that these latter factors were such as to lead the parties to believe that the president of the arbitral tribunal might not be able to decide freely and thus to create a reasonable doubt in PAD's mind as to the arbitrator's independence and impartiality, and that he should have disclosed them to allow the parties to exercise their challenge rights.
 

20. Based 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. It identified the factor likely to give rise to reasonable doubt in the mind of the other party as to the independence and impartiality of the president, and had no obligation to address the evidence invoked in support of the fourth and fifth parts, which it decided not to rely upon.
 

21. The ground is without merit.

 

Operative provision

FOR THESE REASONS, the Court:
 

DISMISSES the appeal;
 

Orders [Municipality 2] International Terminal to pay costs;
 

Pursuant to Article 700 of the French Civil Procedure Code, dismisses the appeal brought by [Municipality 2] International Terminal and orders it to pay EUR 3,000 to Port Autonome de [Municipality 2];
 

Thus rendered and decided by the Court of Cassation, First Civil Chamber, and delivered by the presiding judge at the Court's public hearing of June nineteenth, two thousand and twenty-four.