Minute Arbitration - February 2017

The French Bird & Bird Dispute Resolution - International Arbitration team is pleased to present the February 2017 issue of “The Arbitration Minute” – a French perspective on the latest arbitration news:

• Production of documents in arbitration: should one give all?
• One or three arbitrators: which strategy to adopt?
• Your contract is tainted with corruption: when can you challenge the fraudulent act?

Document production in arbitration: should one give all?

Yes. In some arbitration proceedings, document production may be necessary: each party may then request from the adverse party documents that are relevant and material to the outcome of the case.

Once the arbitral tribunal has ruled that a party should provide certain documents, you are under the obligation to disclose these documents to the adverse party. Note that unlike state courts, the arbitral tribunal cannot enforce the obligation to produce these documents. However, by refusing to do so, you take two risks. First, the arbitral tribunal might draw adverse inferences against you in its award. Second, even if it did not draw adverse inferences, you might lose all credibility in the eyes of the tribunal as it will be easy for it to think that you have destroyed or voluntarily concealed these documents. And what would happen if the document you refused to communicate resurfaces years later?

This can be seen in the judgment dated 21 November 2016 of the Swiss Supreme Court. Following the discovery of a document, which one party had been ordered to produce in the arbitration (five years earlier), the Swiss Supreme Court annulled the award and referred the case back to the same arbitral tribunal that had decided the matter as the document in question, had it had been duly produced, would have changed the decision of the arbitral tribunal.

Judgment cited: Swiss Supreme Court, 4A_412/2016, 21 November 2016

One or three arbitrators: which strategy to adopt?

Your arbitration clause does not determine the number of arbitrators. What are the advantages and disadvantages of having either a sole arbitrator or three arbitrators?

• Sole arbitrator:

• In terms of costs: it is certain, before any arbitral institution, that a sole arbitrator is less costly than a tribunal of three arbitrators.
• In terms of time: as a general rule, a procedure managed by a single arbitrator is also faster because the latter does not have to consult his co-arbitrators on procedural matters or to deliberate on the arbitral award.

• Three arbitrators:

• In complex disputes: you may be concerned that by putting a complex dispute in the hand of a single person, he/she might fail to take into account an element of your case that is material to you. A tribunal composed of three arbitrators offers more security from this point of view: the submissions are read and most of the time heard by three people with a different background and experience, which results in reducing the risk mentioned above.
• Partiality: a tribunal composed of three arbitrators reduces the risk of bias, since if one of the arbitrators were to be biased; the judgment of the other two would temper and rectify his opinion if necessary.

Your contract is tainted with corruption: when can you challenge the fraudulent act?

At any stage of the dispute. Indeed, any act of corruption violates French international public policy when this violation is flagrant, effective and concrete. If your contract is tainted with corruption, you have the right to challenge it during the arbitration proceedings, before the French courts at the time of the execution of the award and even during the proceedings for the annulment of the award.

This principle was recalled in a judgment of the Paris Court of Appeal of 27 September 2016 in which the court annulled an order that enforced an award, the Court arguing that the recognition of an award giving effect to a fraudulent act would violate international public policy. The award was initially enforced and during the appeal of the order enforcing the award, the French criminal court – in proceedings initiated by the Respondent on the basis of a complaint at the outset of the arbitration – convicted the Claimant of corruption. In the Paris Court of Appeal, the Respondent pointed out that the Claimant had not appealed against the criminal court’s judgment and the Court of Appeal therefore annulled the original order.

Judgment cited: Court of Appeal of Paris dated 27 September 2016, first Chamber, no. 15/12614