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Arbitration Procedure

France: Terms of reference – a key document to which the parties to an arbitration procedure must pay particular attention

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In a decision dated 15 June 2017, the French Cour de cassation held that an acknowledgment of the validity of the arbitral tribunal’s constitution in the terms of reference amounts to a renunciation to invoke the tribunal’s lack of independence and impartiality.[1]

In this case, the chair of the tribunal did not disclose any element in his declaration likely to raise reasonable doubt as to his independence and impartiality. However, one of the parties to the arbitration proceedings, the Republic of Equatorial Guinea, was informed by the opposite party that the chair was appointed several years ago in an arbitration procedure, without any link to the present one, but involving the opponent’s parent company. Despite this information, the Republic of Equatorial Guinea did not put forward any objection to the declaration of independence and impartiality of the chair. Moreover, it recognized the validity of the arbitral tribunal’s constitution in the terms of reference signed after having been informed of the chair’s above-mentioned designation. It was only during a procedural ruling, which seemed partial in the Republic of Equatorial Guinea’s eyes, that the latter decided to invoke for the first time the lack of independence and impartiality of the chair. It then filed a request to set aside the arbitral award on the same grounds.

The Court of Appeal dismissed the argument and the Cour de cassation confirmed this decision. Indeed, and according to the Cour de cassation’s reasoning, the Republic of Equatorial Guinea, notwithstanding the information given by the opposite party (information that was also easily and publicly accessible), acknowledged the valid constitution of the arbitral tribunal in the terms of reference and put forward no objection against the arbitrators. Therefore, the Republic of Equatorial Guinea was found to have waived its right to raise any argument based on lack of independence and impartiality, leading to a dismissal of its action to set aside the arbitral award on the ground of the invalidity of the arbitral tribunal’s constitution.

[1] Cour de cassation, 1st Civil Chamber, 15 June 2017, No. 16-17.108

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Eric Borysewicz is a partner in Baker McKenzie's Litigation and Arbitration Practice Group in Paris. He represents clients in dispute resolution proceedings before state jurisdictions, as well as internal and international arbitration proceedings under ICC rules and other arbitration institutions. Eric focuses his practice on risk management issues, routinely advising on major litigation involving industrial and infrastructure projects, damages and claims as well as product liability litigation. He also assists clients with post-acquisition litigation and unfair competition and reputation piracy and advises on a broad range of transactional matters. Eric is highly regarded for drafting and negotiating complex industrial and infrastructure project agreements, as well as renegotiating existing agreements following an unforeseen change in circumstances. Eric Borysewicz can be reached at Eric.Borysewicz@bakermckenzie.com and + 33 1 44 17 53 85.

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Karim Boulmelh is a partner in Baker McKenzie's Paris office. He specializes in business litigation and industrial risks, representing clients before the state courts and during domestic and international commercial arbitration. He also assists clients in litigation in various sectors (telecommunications, energy and industrial gases, aeronautics, satellite industry, etc.). Karim works on large industrial and infrastructure projects, commercial contracts, construction law and international trade laws, as well as post-acquisition litigation, action for unfair competition and parasitism, and international goods sales.

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