We refer to the newsletters of the 14 October 2014 and 16 October 2014. Since the 14 October of this year and the circulation of the ruling of the Paris Court of Appeal against an enforcement of an award for an arbitration award given the 29 March 2011 by the sole arbitrator Mr Henri Alvarez, FASKEN MARTINEAU DUMOULIN LLP, the world of arbitration is in turmoil.

With regards the importance granted to arbitration in Africa, in particular in the OHADA single legal space, all stakeholders of arbitral justice must question their professional practices in light of the ethical and practical scope of this fundamental ruling. How do we accept the slightest infringement to the principles of independence and impartiality of arbitrators who are the very essence of arbitral justice? These cardinal principles are in fact the vital prerequisite of any decision likely to be enforceable in a rule of law. A prerequisite in fact vital, since any infraction to their vulnerability would cast scorn on arbitral justice as a whole and would incite a generalised loss of interest in the business world.

In this case, they are breaches to obligations to disclose the arbitrator and the law firm in which he is a partner that characterise the irregular nature of the composition of the court of arbitration and strips the given judgement of its effectiveness, in France similar in practise to around the world: the arbitrator for not having correctly disclosed his links with one of the parties, and his law firm, for having accepted, right in the middle of an arbitration and with no disclosure, to be an advisor in an operation of nearly 600 million US dollars for a client that was, at the same time, part of this arbitration.

Guided by a sole arbitrator, a major partner of the firm having disclosed nothing of this operation, the arbitration proceedings in question concerned however several hundreds of millions of Euros and put the survival of thousands of jobs at stake! It is fundamental for the future of arbitral justice to curtail this type of downward slide the sometimes dramatic consequences of which may cast reasonable doubt on the legitimacy of the jurisdictional power granted to a court of arbitration, a fortiori when it is made up of a sole arbitrator.

It will be recalled in this respect that the conflicted arbitrator must be bound, in virtue of the general principles of civil liability, to compensate for the damage potentially caused to the parties. When through his fault, as it happens the insufficient disclosure of the business ties, the arbitrator injured one of the parties that exposed the exorbitant costs of defending itself and found itself as well as its creditors, in extremely serious hardship owing to an intermediary vitiated award, he must be ordered to pay compensation.

It is precisely the case in this instance. In fact, the conflicted award given in March 2011 precipitated the defendant company to the arbitration and its creditors towards very serious economic hardship. Unfortunately this award, the vices of which had been discovered after expiry of the appeal deadline in Barbados weighed like “the sword of Damocles”. In fact, this arbitration was supposed to proceed in two parts; the contentious award concerning the principle of liability and the second award to occur on the quantum of damages, the initial petition for which stood at 990 million US dollars. The extent of the damages caused by a vitiated award may be devastating for the company, its employees, its creditors and a fortiori, when the vitiated award has become final.

How then can you restore the parties to how they were before the arbitration? The loss is colossal. While the defendant party to the arbitration is the first obvious direct victim, what about the harm caused by this vitiated award to the creditors and notably, the harm resulting from the immobilisation of accounts receivable? Abandonment, spreading out over several years, loss of interest? Just like a professional judge who may respond in a disciplinary, civil indeed penal way to a professional fault, an arbitrator and the law firm to which he belongs must also respond to any deficiency characterised in the ruling of the arbitral justice.

While the State is bound to compensate for the damage caused by the malfunctioning of the public justice service, insurance policies must serve to compensate for damage caused by the malfunctioning of the arbitral justice. And insurance companies must demand from the arbitrators, their policy holders, that they strictly abide by their obligations of independence, impartiality and disclosure.

Joseph Kamga, Chairman AEDJ
Email: joseph.kamga@aedj.org