Background of the case

The dispute arose in connection with the business relations between three Brazilian companies, bound by a joint operating agreement for the implementation of an offshore oil project: Dommo Energia SA (Dommo), Barra Energia do Brasil Petróleo e Gás Ltda (Barra), and Queiroz Galvão Exploração e Produção SA, now Enauta Energia SA (Enauta). A dispute led to the exclusion of Dommo from the consortium, preventing it from selling its stake to a third party. Dommo initiated an arbitration against Barra and Enauta (respondents) before the London Court of International Arbitration (LCIA). The seat of the arbitration was Paris. The arbitrators appointed by both sides transmitted their respective declarations of independence in November 2017. Once constituted, the arbitral tribunal rendered a series of interim and costs awards between February 2018 and January 2019. Dommo initiated setting aside proceedings against these awards before the International Chamber of the Paris Court of Appeal on the ground that the arbitral tribunal was irregularly composed (article 1520 (2°) of the French Code of Civil Procedure).

At the origin of Dommo’s action against the awards is the addition of a new lawyer to Barra’s team of counsel. This led to the co-arbitrator appointed by Barra and Enauta updating his declaration of independence on November 5, 2018. On December 31, 2018, Dommo requested clarifications from the co-arbitrator. The latter replied by stating that between April 2012 and July 2015, he was senior international counsel at a Saudi firm that was affiliated with the Canadian law firm of Barra’s new lawyer. This firm had among its clients between 2008 and 2014, two of Barra’s shareholders, the investment funds First Reserve Corporation and Riverstone Holdings. The co-arbitrator indicated that he did not know these entities and ignored what kind of services had been provided by the Canadian law firm to them.

On January 17, 2019, Dommo filed a challenge against the co-arbitrator with the LCIA, which was rejected on February 20, 2019.

Dommo argued before the International Chamber of the Paris Court of Appeal that the arbitrator’s failure to disclose the links with a law firm that counted amongst its clients the shareholders of one of the parties to the dispute was sufficient to cast doubt on the independence and impartiality of the arbitrator. Dommo further stated that its challenge was not untimely since (i) the information in question had only come to light after the arbitrator’s second statement, and (ii) the information was not widely known and even though publicly accessible, required detailed research to be found. In response, Barra and Enauta alleged that the information in question was in fact public knowledge, that the link was in any event insignificant and indirect and that it was not of a nature such as to affect the arbitrator’s judgment or create a reasonable doubt in the minds of the parties as to the arbitrator’s independence. They also pointed out that the challenge was out of time.²

The ruling of the International Chamber of the Paris Court of Appeal 

The question that the Court had to answer was twofold: (i) whether the arbitrator had a duty to disclose the links that existed between himself and Barra, despite their alleged publicity, and (ii) whether the nature of the links was such as to influence the arbitrator’s independence and impartiality.

On the first issue, the Court ruled that “access to information [regarding the links] requires several successive operations amounting to investigation measures that cannot characterize readily available information, in a way that the information cannot be considered as public knowledge and therefore the arbitrator should have disclosed it in his first declaration” (section 52).

On the second issue, the Court found that the links between the arbitrator and Barra were too tenuous to give rise to the setting aside of the award. It ruled in particular that in order for the non-disclosure of his position in the Saudi law firm to give rise to a reasonable doubt as to his impartiality or independence, (i) this position should have generated a direct or indirect, material or intellectual link with the shareholders or their subsidiaries, (ii) a business stream should have existed between them and the co-arbitrator, or (iii) he should have maintained an interest with the Canadian law firm that could create a conflict of interest. None of these circumstances was established (sections 55 and 56). Consequently, the Court rejected the challenge against the awards.

Analysis and takeaways

As a reminder, given that the arbitrator’s duty of independence and impartiality is, by its nature, difficult to assess, it is internationally accepted that control by national courts relates in reality to the arbitrator’s duty of disclosure. In this respect, under French law, an arbitrator must disclose any circumstances that could, in the eyes of the parties, give rise to a reasonable doubt regarding their independence or impartiality. The arbitrator’s duty of disclosure is continuous and therefore applies both at the time of the arbitrator’s acceptance of their appointment, and also during the proceedings.

The Court’s decision is interesting as it clarifies the confines of the public knowledge exception (exception de notoriété), that is, the exception according to which the disclosure duty of an arbitrator does not apply in relation to information that is public knowledge. The Court made the effort to clarify the notion of public knowledge. It considered that the exception did not apply as the information in question was accessible only following “a thorough review and careful consultation of the arbitrator’s website requiring that all links relating to conferences in which he has participated be opened and the content of one publication after another to which he contributed be consulted.”

The position of the Court is in line with previous French case law (see the recent decision from the French Cour de cassation dated October 3, 2019, Audi Volkswagen Middle East Fze LLC v. Saad Buzwair Automotive Co.) and strikes a balance between the arbitrator’s duty to disclose and the parties’ “duty of curiosity.” At the outset of the case, the parties must carry out minimal verifications as to potential conflicts affecting the arbitrators. If information is public knowledge, it is expected that parties should have found it.

In the present case, the Court had to address the specific question of whether information available on the internet is public knowledge. The Court’s approach is pragmatic: if information, although available on the internet, cannot be easily retrieved, it may not be considered as public knowledge for the purpose of the disclosure duty. Because the link between the arbitrator and Barra could not be found in just a few clicks but required an exhaustive review of all the links relating to the arbitrator’s activity, the Court rejected the exception of public knowledge. To sum up, the accessibility of information is the determining criterion for its characterization as public knowledge. 

The other takeaway from this first ruling is the confirmation of the dissociation between undisclosed facts and the lack of independence and impartiality. The Court takes a position close to what appears to be the latest state of jurisprudence. For some time, French case law seemed to link the failure to disclose with a lack of independence or impartiality, which could lead to the setting aside of the award, the parties having been deprived of their right of challenge. French case law now clearly dissociates the disclosure duty from the arbitrator’s independence. The solution is balanced as it limits the risks of an award being set aside on the pretext of a minor oversight from one of the arbitrators.

To dismiss the claim of lack of independence or impartiality, the Court reviewed in concreto the nature of the link between the arbitrator on the one hand, and the party (Barra) and its shareholders on the other, to assess the incidence of such a link on the arbitrator’s independence and impartiality. In doing so, the Court assessed the existence of material links (e.g., financial links or hierarchical relationships) or intellectual links with the party (Barra) and its shareholders, assessing the business stream between these entities and the arbitrator. In a context where law firms tend increasingly to build networks and develop relationships with other firms, the Court’s ruling is a reminder of the importance of a high-performing conflict search mechanism within law firms to identify and prevent conflicts of interest.

Interestingly, it should be noted that, according to the Court, the fact that the arbitrator had previously used an email address with the Canadian firm’s domain name was not sufficient to establish such a link between the arbitrator and the Canadian firm.

Lastly, the Court used this case as an opportunity to clarify its position regarding the lapse of time between the circumstances giving rise to the challenge and the arbitrator’s disclosure or lack thereof. One of the respondents argued that two and a half years had passed between the facts giving rise to the challenge and the time of the arbitrator’s appointment, leading to the alleviation of the arbitrator’s duty to disclose. Although the Court did not need to respond to the argument, it noted, in an obiter dictum, that such a period could not be sufficient in the case of a lack of disclosure of direct links or circumstances likely to affect the arbitrator’s impartiality.

1. Further illustrating this trend, France recently undertook an important transformative reform (effective since January 1, 2020) aimed at simplifying its judicial system as well as the functioning of its civil procedure. One of the key features of this whole reform lies in the creation of a new first instance court (the judicial court, or tribunal judiciaire) concentrating claims which were previously divided, according to their nature as well as the amount at stake, between two distinct first instance courts: courts of first instance (tribunal d’instance) and high courts of first instance (tribunal de grande instance). The Reform also introduces new rules regarding provisional enforcement as well as provisions to enhance the recourse to alternative dispute resolution and to simplify the method for solving conflicts of jurisdiction.
2. Article 10.3 of the LCIA arbitration rules provides that a party shall challenge an arbitrator within 14 days of the formation of the arbitral tribunal or within 14 days of becoming aware of any grounds. The question arose whether Dommo had complied with this lime limit. The case could have been an opportunity to rule on the much debated issue of the inadmissibility of setting aside proceedings for lack of independence and impartiality due to the initial late challenge. French case law has indeed ruled that an untimely challenge against an arbitrator (or, more broadly, any type of claims made out of time against an award) may give rise to a presumption of waiver of the challenge on such ground. The Court avoided, however, entering into the discussion in ruling that the claim of inadmissibility had not been submitted in compliance with French procedural law (i.e., as a standalone claim and not included in the arguments on the merits).