In Kabab-Ji SAL (Lebanon) v Kout Food Group (Kuwait) [CA Paris, 23 June 2020, n°17/22943], the Paris Court of Appeal refused to set aside an arbitral award handed down by an ICC Tribunal seated in Paris, although the same award had been denied enforcement and recognition in England on the basis that the award was made against a non-party (our post on the English decision can be accessed here). The French court expressly rejected the argument that it was bound by the English decision.

This case is another illustration of the differences in approach between French and English courts with respect to (i) the identification of the law governing the arbitration clause and (ii) the extension of arbitration agreements to third parties.

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Tribunal awards India first BIT case win, dismissing claims of French investor

An UNCITRAL arbitral tribunal has reportedly dismissed a US$36 million claim by a French investor, Louis Dreyfus Armateurs SAS (“LDA“), against India under the 1997 France-India bilateral investment treaty (“BIT“). The award is not public at this time, but press reports state that LDA has also been ordered to pay approximately US$7 million in respect of India’s substantial legal expenses.

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French Conseil d’État rules on scope of powers to set aside arbitral awards / Le Conseil d’État s’est prononcé sur l’étendue de son contrôle s’agissant de l’annulation d’une sentence arbitrale internationale

In a decision of 9 November 2016, the French Conseil d’État, France's highest administrative jurisdiction, ruled on the extent of its scope of review as regards annulment of an international arbitral award. The decision relates to an ICC arbitral award made in Paris arising from a dispute between Fosmax, subsidiary of French power utility Engie (formerly GDF), and construction consortium STS.  The Conseil d’État's decision represents the latest in a series of cases following the "INSERM" decision (referred to in our blog post here), giving administrative authorities jurisdiction over appeals of international arbitration awards issued in France which relate to administrative contracts. This approach derogates from Article 1519(1) of the French Code of Civil Procedure ("CPC") under which an action to set aside an award is brought before the Court of Appeal of the place where the award was made and seems to establish a dual regime for review of arbitral awards, depending on whether the award involves a public entity.

Please read on for further details and a French-language version of this blog post.

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Scope and validity of asymmetric jurisdiction clauses in France

On 7 October 2015, in Cass. 1ère Civ., 7 October 2015, No 14-16.898, the Cour de cassation (the French Supreme Court) handed down a decision that significantly clarified its interpretation of the rules for jurisdiction clauses within the European Union (EU). It thereby added to its case law on unilateral or asymmetric jurisdiction clauses, that is, jurisdiction clauses that do not give the same rights to each party to the contract.

In this case, a company incorporated in France and a company incorporated in Ireland had signed a contract with a jurisdiction clause, whereby the parties agreed that disputes would come under the jurisdiction of the courts of the Republic of Ireland. However, the same clause also reserved the right for the Irish company alone to apply to the courts with jurisdiction over the counterparty's registered office, or those in any country where it suffered a loss caused by the counterparty. The French company complained that the Irish company was infringing competition law, and started proceedings before the Paris Commercial Court, seeking compensation for the harm it had suffered. The Irish company successfully argued that the Commercial Court lacked jurisdiction, which belonged to the courts of Ireland. When the French company's appeal to the Paris Court of Appeal was equally unsuccessful, it appealed to the French Supreme Court.

In its decision of 7 October 2015, the Supreme Court took the opportunity to:

  • Refine the case law from X v Banque Privée Edmond de Rothschild (Cass. 1ère Civ., 26 September 2012, No 11-26.022) (Rothschild) and Cass. 1ère Civ., 25 March 2015, No 13-27.264 (Crédit Suisse), upholding asymmetric jurisdiction clauses provided they objectively identify the courts that may have jurisdiction at the choosing of the party benefiting from the asymmetry (see our previous blog posts here and here)
  • Incorporate case law from the Court of Justice of the European Union (CJEU) into its decision: under EU case law, jurisdiction clauses only apply to disputes over alleged infringements of EU competition law if the clause specifically so provides.

Notwithstanding the fact that the French courts have not had a chance to consider the issue in relation to arbitration since the Rothschild case, there is nothing to suggest that the court's reasoning in the Rothschild, Credit Suisse or Apple cases would apply with regard to clauses containing an arbitration agreement with an option to litigate in one particular jurisdiction, or an exclusive jurisdiction clause with an option for one party to bring arbitration proceedings (so-called hybrid dispute resolution clauses). Throughout the period of uncertainty as to the availability of asymmetric jurisdiction clauses, hybrid arbitration clauses may be an appropriate option for parties in circumstances where there is a nexus with France. 

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Paris Court of Appeal orders the retraction of an award made where one arbitrator lacked independence: the ongoing Tapie saga

In a remarkable judgment of 17 February 2015, rendered further to a rarely-seen application for revision of an arbitral award (which in this case lead to the retraction of the award), the Paris Court of Appeal overturned an arbitral award issued by a three-member tribunal in Paris in 2008 in favour of Bernard Tapie (Tapie), a French businessman and ex-politician, against the Consortium de Realisation (CDR), a French stated-owned company. The Court found that the award was tainted by fraud on the ground that there had been collusion between one of the arbitrators, Mr Pierre Estoup (Estoup) (a former president of the Versailles Court of Appeal), and Tapie and his counsel, Me Lantourne (Lantourne), with Estoup deliberately and systematically influencing the arbitral tribunal’s decision-making process in favour of the interests of the party that he intended to promote. Tapie and his group of companies had received € 403 million in damages under the award in question.

The dispute at the origin of the now-retracted award was highly publicised, because it involved one of France’s most famous businessmen of the 80’s, a French state-owned company, the French Government at the time of the arbitration (including the then Ministry of Finance, Ms Christine Lagarde, now Chairman of the IMF), and an arbitral tribunal composed of three renowned French legal personalities (alongside Estoup, sat Mr Jean-Denis Bredin, a well-known lawyer, and Mr Pierre Mazeaud, a law Professor and former President of the French Constitutional Council who acted as Chairman of the arbitral tribunal).

The judgment is a rare example of a successful motion for the revision of an award under French law. The French Court first classified the arbitration as domestic and then concluded that the facts disclosed in a related criminal investigation evidenced links between Estoup, Tapie and Lantourne which had been fraudulently concealed by Estoup – demonstrating a lack of independence, which had been confirmed by the arbitrator’s attitude during the arbitration proceedings. A handful of court judgments have been overturned in similar circumstances, which gives some indication as to what the legal consequences and next steps following the retraction of the arbitral award may be. However the precise legal consequences are still to be determined.

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New ruling of the French Cour de cassation in the Tecnimont judicial saga on challenge of an arbitrator

In Avax v Tecnimont (Civ. 1ère, 25 June 2014, pourvoi n° 11-26.529) the French Supreme Court reviewed the Paris Court of Appeal’s decision regarding the effect of the time limits in institutional rules on the judge reviewing the award. 

On 25 June 2014, the French Supreme Court (the Cour de cassation) held that a party that had failed to exercise its right to challenge an arbitrator within the time limit specified by the applicable arbitration rules is deemed to have waived its right to have the award set aside on that ground. In other words, the French Supreme Court held that the arbitration rules that have been chosen by the parties to govern the arbitration have a legal effect on the judge reviewing the award and cannot be disregarded once the arbitral award has been rendered. The decision reversed a controversial decision rendered by the Reims Court of Appeal in 2011.

This is the latest decision in the now long-running judicial saga of the 2007 ICC award in Avax v Tecnimont. The Paris Court of Appeal initially annulled the award in 2009, on the ground that the chairman of the tribunal had failed to disclose his law firm’s representation of companies affiliated to one of the parties during the arbitration proceedings. That decision was then reversed on a procedural ground by the French Supreme Court in November 2010. The case was then referred to the Reims Court of Appeal, which set aside the award again, this time for a failure to disclose conflicts of interests and to take into account the impact of the ICC rules on challenging arbitrators.

In the latest decision, the French Supreme Court ruled on the same case for the second time, but on a different legal issue, reversing the Reims Court of Appeal decision only on the question of the legal authority of the ICC Rules. It did not rule on the second question addressed to it, which concerned the scope of the arbitrator’s duty of disclosure. The French Supreme Court has sent the case back to the Paris Court of Appeal, which will issue another decision on the case (although it will be dealt with by a different chamber of the Paris Court of Appeal).

The decision is a reminder to parties to consider promptly their rights under any agreed institutional arbitration rules and, more importantly, to heed the time limits imposed by those rules.

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Paris Arbitration Rules launched

Paris the Home of International Arbitration (Paris Place d’arbitrage) unveiled its newly drafted Paris Arbitration Rules on Monday, April 15 at the group’s annual conference, held at the Hôtel de Ville in Paris. The conference, chaired by Charles Kaplan (President of Paris Home of International Arbitration and Co-Head of Herbert Smith Freehills’ Global Arbitration Practice), featured several speakers including Alexis Mourre (Honorary President) and Philippe Pinsolle (Vice President). Professor François-Xavier Train (Université Paris Ouest (Nanterre La Défense)), Pierre-Yves Tschanz, and Isabelle Hautot (General Counsel, International Conflicts Resolution, Groupe Orange) provided additional commentary from the perspectives of academics, practitioners, arbitrators and users. The conference also featured an address by Christiane Féral-Schuhl, Bâtonnier of the Paris Bar.

The Paris Arbitration Rules set out an innovative mechanism for ad hoc arbitration.

They grant broad discretion to the Arbitral Tribunal with respect to case management and procedural issues, and impose corresponding obligations on the parties to cooperate in the resolution of such issues. This combination of discretion and cooperation is intended to “provide a framework for the swift, efficient and cost-effective resolution of disputes” (Article 1.1). Further emphasizing the focus on efficiency, the Tribunal exercises its discretion within strict time limits. The Rules also provide for the timely awarding of interim measures, either by a specially-appointed Interim Arbitrator, or by the Tribunal itself.

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Singapore arbitration update

This update considers recent statistics released by the Singapore International Arbitration Centre (“SIAC“). We also examine recent and pending events affecting Singapore, some developments in international arbitration law from France that could affect parties operating in the region, and review the latest arbitration-related caselaw.

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