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A landmark decision on the independence of arbitrators and the client-attorney relationship

A landmark decision on the independence of arbitrators and the client-attorney relationship

By a decision of November 2, 2011 the Reims Court of appeals has clarified the position of French arbitration law on two important questions concerning the independence of arbitrators, namely :

1/ If during arbitration proceedings a party learns facts putting in question the independence of an arbitrator but fails to request the recusation of that arbitrator within the time limits imposed by the applicable arbitration rules, is that party estopped from applying for the annulment of the award rendered by that arbitrator ?

2/ To what extent is an arbitrator associated with a prominent international law firm entertaining a client-attorney relationship with a party to the arbitration to be considered independent from that party ?

Decision

The Reims Court of appeals ruled (i) that the recusation of an arbitrator before the arbitral institution and the review of an arbitral award before a court are separate procedures « which do not have the same purpose and which are not subject to the same authority » and (ii) that the decision of the ICC Court is « of an administrative nature with no res judicata effect ».

Therefore, a failure to follow the rules for the recusation of an arbitrator do not per se preclude a party from seeking the annulment of the award for lack of independence of the arbitrator.

The Court found that the firm in question before and after the start of the arbitration had advised one of the parties, two of its successive parent companies and one of its 100% subsidiaries in six different projects. These facts were found sufficient to conclude that the arbitrator lacked independence.

It does not matter that the arbitrator ignored them because the arbitrator has a continuing and affirmative duty to investigate facts which can reasonably cast a doubt on his impartiality and independence. That includes, in particular, facts pertaining to the law firm he belongs to, no matter what the terms of his association with that law firm might be.

Review by Edouard Bertrand

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