On 31 March 2021, the Paris main first instance court (tribunal judiciaire, formerly tribunal de grande instance) ruled on the international jurisdiction of French courts to determine arbitrators’s liability. It held that it was a contractual claim in the meaning of Article 7(1)(b) of the Brussels I bis Regulation and declined jurisdiction on the ground that the arbitrator had provided his service in Germany. This post is based on a press release of the court.
The case was concerned with distribution contracts in the automobile industry. The contracts contained clauses providing for ICC arbitration in Paris under German law. The origin of the parties is unknown, but none of them was French.
After two contracts were terminated, an arbitration was initiated. The parties agreed that the hearings would be held in Germany.
The resulting award, however, was challenged before French courts, and ultimately set aside on the ground that one arbitrator had failed to disclose certain relationships between his law firm and one of the parties to the arbitration.
The arbitrator was sued in Paris for damages.
The first issue was whether the European law of jurisdiction applied. The Brussels Ibis Regulation includes an “arbitration exception”. Did a claim seeking to establish the liability of the arbitrator fall within it?
The Paris court held that it did not. It ruled that the claim was based on the “arbitration contract” existing between the parties and the arbitrators, and that this contract was distinct from the arbitration. Thus, the Brussels Ibis Regulation applied.
This is the most unconvincing part of the judgment. The proposition that the arbitration contract is unrelated to arbitration is really surprising. Aren’t the obligation of impartiality and independance, and the related disclosure obligation, found in arbitration legislations?
More generally, the distinction established by the European Court of Justice has been between the substantive rights that the arbitration proceedings are meant to settle, and proceedings ancillary to arbitration. So, in Van Uden for instance, the Luxembourg Court explained that proceedings relating to “the appointment or dismissal of arbitrators” fell within the exclusion. Could it really be that proceedings seeking damages for wrongful appointment of arbitrators do not?
Let’s admit, for the sake of the argument, that the Brussels I bis Regulation applied. Was it, then, a contractual claim? The Paris court held so on the basis of the existence of an “arbitration contract” between the arbitrator and the plaintiff.
The existence of such a contract, however, is disputed. It is more or less convincing depending on the particulars of the case, that I do not know. If the parties and the arbitrators had entered into Terms of reference, which should be the case in ICC arbitration, the characterisation made sense.
In other cases, however, the existence of a contractual relationship is less clear, in particular as between a party appointed arbitrator and the party who did not appoint him.
Place of Provision of the Service
If the claim was contractual, the relevant contract was quite clearly a provision of service in the meaning of Article 7(1)(b) of the Brussels I bis Regulation. It was therefore necessary to determine the place of the provision of the service.
The court first considered the provisions of the “contract” (it is unclear which contract: the arbitration agreement? the terms of reference?), which stated that “the place of the arbitration is Paris” and “The arbitral award and procedural orders are deemed to be rendered at the place of arbitration, that is Paris”. The court held, however, that these provisions did not reveal the choice of the parties to locate the provision of the services in Paris.
The court then assessed where the arbitrator had actually provided his intellectual service. The court found that it had been provided in Germany. The hearings had been held there, and the deliberations are taken place there. The court declined jurisdiction.
What is Next?
So it seems that the aggrieved party should now sue the arbitrator in Germany.
But will German courts also consider that the claims fall within the scope of the Brussels I bis Regulation and, if not, would they retain jurisdiction?