Court of Cassation, No. 18-15.756 | Rory Wheeler, avocat (Paris) & solicitor (England)

Court of Cassation, 1st Civil Chamber, 3 October 2019, No. 18-15.756

Challenged decision: Paris Court of Appeal, Pole 1 - First Chamber, 27 March 2018, No.16/09386

AUDI VOLKSWAGEN MIDDLE EAST FZE

vs.

SAAD BUZWAIR AUTOMOTIVE CO

THE COURT OF CASSATION, FIRST CIVIL CHAMBER, delivered the following judgment:

Whereas, according to the judgment under appeal, in February 2013, Saad Buzwair Automotive Co (SBA) initiated arbitration proceedings before the International Chamber of Commerce, on the basis of the arbitration clause provided in the contractual agreements entered into with Audi Volkswagen Middle East Fze (AVME); in March 2016 the arbitral tribunal, in which Mr. Q… was the arbitrator appointed by the SBA, issued an award dismissing the SBA’s claims; that the SBA, after learning that the law firm Haver & Mailänder (H & M), to which Mr. Q… belongs, had carried out several assignments, before and during the arbitration, for entities of the Volkswagen group, including Porsche, filed an action to set aside the award;

On the sole ground, taken in its second part, hereafter annexed: Whereas there is no need to give a specially reasoned decision on this claim, which is clearly not sufficient to reverse the decision of the Court of Cassation;

On the first, third, fourth and fifth parts of the ground:

Whereas AVME objects to the decision to set aside the award, then, according to the ground:

1°/ that the arbitrator does not have to disclose to the parties facts that are known or easily accessible, neither before accepting his mission, nor during the arbitration; 2°/ by ruling as it did after finding that information published in the JUVE professional directory, 2010/2011 edition, was to be regarded as public knowledge since this professional directory is known “to all German business law firms”. The information published in the same professional directory, edition 2015/2016, published in October 2015, i.e. before the award was made, mentioning the representation of Porsche, an entity of the Volkswagen group, in the context of an ongoing dispute by the arbitration and mediation department of the law firm H & M, was also well known; so that the arbitrator did not have to disclose it, the Court of Appeal, which did not draw the legal consequences from its findings, breached Articles 1456, paragraph 2, 1506 and 1520-2, of the Code of Civil Procedure ;

2°/ That, in any event, an award may only be set aside for failure by the arbitrator to comply with his obligation to disclose when the circumstances not disclosed were sufficient to give rise to justifiable doubts as to the arbitrator’s impartiality and independence; that in ruling as it did, grounds taken that the arbitrator, M. Q…, did not disclose during the arbitration that between 2014 and 2015, Porsche, an entity of the Volkswagen, was a client of the law firm H & M for an assignment that was “sufficiently important for the firm to make it part of its publicity and to include it in its top five most noteworthy cases” and that this was a “circumstance likely to give rise to a justifiable doubt as to the arbitrator’s independence and impartiality, it being furthermore noted that the aforementioned certificate of M…. G… that in 2010, a mission was entrusted by Porsche to H & M, a minor mission, but not disclosed by the arbitrator and not made public by the firm”, without verifying, as it was invited to do, whether such circumstances could give rise to a justifiable doubt as to the independence and impartiality of the arbitrator in the mind of the SBA, since the SBA did not express any reservations, nor a fortiori requested the challenge of the same arbitrator, when he disclosed at the beginning of the arbitration, on 30 October 2013, that he had been appointed as arbitrator by another company of the Volkswagen group in another arbitration procedure, the Court of Appeal did not legally justify its decision in the light of Article 1520-2, of the Code of Civil Procedure;

3°/ that, in any event, an award may be set aside for failure by the arbitrator to disclose only when the circumstances not disclosed were such as to give rise to justifiable doubt in the minds of the parties as to the arbitrator’s impartiality and independence; that in noting that the mission entrusted by Porsche, an entity of the Volkswagen group, to the law firm H & M, to which the arbitrator belongs, was “sufficiently significant for the firm to make it an element of its publicity and to include it in its top 5 most outstanding cases” and that it was “of undeniable importance in the eyes of the firm to which the arbitrator belongs”, as the Court of Appeal did not have any valid reasons to explain how this circumstance was likely to cause the SBA to have justifiable doubts about the arbitrator’s impartiality and independence, the Court of Appeal did not legally justify its decision under Article 1520-2 of the Code of Civil Procedure;

4°/ that in any event, an award may only be set aside for failure by the arbitrator to disclose when the circumstances not disclosed were such as to cause the parties to have justifiable doubts as to the arbitrator’s impartiality and independence; that in noting that it is “in addition it results from the aforementioned attestation of M. G… that in 2010, a mission was entrusted by Porsche to H & M, a minor mission, but not declared by the arbitrator and not made public by the firm”, without explaining how this circumstance was such as to raise justifiable doubts in the mind of the SBA as to the impartiality and independence of this arbitrator, the Court of Appeal did not legally justify its decision under Article 1520-2 of the Code of Civil Procedure;

Whereas, however, the Court of Appeal decided correctly that if the existence of a contract executed in 2010 by the law firm H & M for Volkswagen Bank was to be considered as well-known by virtue of its publication before the commencement of the arbitration in a professional directory known to all German business law firms, on the other hand, AVME was not required to continue its research after the commencement of the arbitration and the arbitrator had a duty to inform the parties of any circumstances that might affect his independence or impartiality arising after the acceptance of his assignment ;

Whereas, secondly, the judgment points out that the mission entrusted during the arbitration by Porsche to the law firm H & M, was undeniably important in the latter’s eyes, to be sufficiently notable, in its publicity, in the “top 5” in 2014 and 2015 of its most outstanding cases; that by these statements, which are the result of its independent discretion, the Court of Appeal, which was not required to investigate issues that these findings rendered irrelevant, legally justified its decision on the existence of a justifiable doubt as to the independence and impartiality of M. Q… ;

Hence he follows that the ground, the fifth part of which criticises overabundant reasons, is unfounded;

FOR THESE REASONS:

Dismisses the appeal;

Orders Audi Volkswagen Middle East Fze to pay the costs;

Pursuant to Article 700 of the Code of Civil Procedure, rejects its application and orders it to pay the company Saad Buzwair Automotive Co the sum of EUR 3,000;

Done and judged by the Court of Cassation, First Civil Chamber, and pronounced by the President in its public hearing of the third of October two thousand and nineteen.