Welcome to our latest update, focused on bringing you closer to the pulse of arbitration in Paris. In this edition we have curated key arbitration points that we believe are important for you, our clients:

• A review of the latest French Court of Cassation’s ruling on arbitrator-party counsel conflicts of interest,
• Key insights from the EU’s formal notification of its withdrawal from the ECT,
• Essential tips to prepare and deliver your opening statement in arbitration hearings,
• A look at disputes (both contract- and treaty-based) in the hospitality sector, and
• News of my appointment as an ICC Court Member for the next three years!

Enjoy the read! Please do get in touch if you have any feedback or questions. Ioana

Latest French Arbitration Case Law

ARBITRATION & CONFLICT OF INTEREST: Can undisclosed close personal ties between an arbitrator and a party’s counsel lead to the annulment of an award? The French Court of Cassation addressed this question in a mediatised decision dated 19 June 2024.

The case involved the Douala International Terminal (DIT) and the Port Autonome de Douala (PAD), concerning a contract for the management and operation of a terminal at the port of Douala, Cameroon. After a dispute arose, DIT, represented by Emmanuel Gaillard, initiated an ICC arbitration.

Following an unfavourable partial award, PAD sought annulment before the Paris Court of Appeal based on the alleged lack of independence and impartiality of the president of the tribunal, citing a eulogy he had published in honour of Emmanuel Gaillard (who tragically passed away in April 2021) which suggested close personal ties.

The Court annulled the award, noting in particular that although DIT argued that PAD had waived its right to challenge the arbitrator’s impartiality by not doing so earlier (despite expressing doubts during the arbitration), the eulogy’s revelations was new and significant (§10). DIT initiated a recourse against this decision before the Court of Cassation.

The Court of Cassation upheld the Court of Appeal’s decision, finding in particular that:

i.    the arbitrator has a duty to disclose any close personal or professional ties throughout the arbitration (§13),

ii.    “close” relationships requiring disclosure do not typically include academic or professional interactions unless they suggest a personal closeness beyond such contexts (§§14-15),

iii.    remarks in the eulogy, which inherently contained “a degree of emphasis and exaggeration” (“I admired and loved him”), should be interpreted as an expression of tribute to a respected figure in the field of arbitration rather than evidence of influence (§16),

iv.    other remarks contained in the eulogy, however, established a link between the close personal ties and the ongoing arbitration, as the president admitted he consulted Emmanuel Gaillard on “important choices” and that he “looked forward to hearing his formidable, razor-sharp pleadings again, where precision and insight were even more captivating than any rhetorical flourish” (§§17-18), and

v.    such ties, based on "an objective fact", could lead parties to reasonably doubt the president’s independence and impartiality, and “should have been disclosed by him to allow parties to exercise their right to challenge” (§19).

Takeaway? This decision underlines the arbitrators’ obligation to disclose throughout the procedure any new facts which may raise doubt as to their independence and impartiality (the latest illustration being the Telecom Italia decision). It further suggests that, while mere professional and academic connections do not require disclosure, personal ties must. The arbitrators are left with the difficult task to appreciate the extent of such disclosure.

(Read the French Court of Cassation’s decision here)

REGIONAL HIGHLIGHTS – European Union

Last month, on 26 June 2024, the EU has completed its final move to exit the ECT by formally notifying its withdrawal of the treaty. This action marks a significant shift in the EU’s approach to energy sector agreements and arbitration, which reflects its commitment to climate and energy goals. Here are the key insights from this declaration:

• This withdrawal is justified by the ECT’s misalignment with the Paris Agreement, and therefore marks a key step towards integrating climate objectives into international agreements;
• The EU’s exit from the ECT, effective in one year, comes after significant criticism against the ECT in the last years, which lead several EU Member States – such as Germany, France, Spain, Portugal, the Netherlands, Luxembourg, Denmark, Poland, Slovenia, Ireland and the UK – to either announce their intention to withdraw or to have already formally exited the treaty;
• The EU and its Member States have accompanied this notification with a common Declaration on the legal consequences of the CJEU’s Komstroy judgment, which upheld the ECT’s arbitration clause’s incompatibility with EU law. Therein, the EU and its Member States have agreed to end intra-EU arbitration proceedings under the ECT, thus seeking to disapply the “sunset clause” contained in Article 47(3) of the ECT (which ensure that investors’ investments remain protected for a period of 20 years following the effective date of withdrawal);
• This Declaration, so far, only serves as a political statement without legal effect until the formal agreement is ratified, accepted or approved. The binding nature of this new agreement on arbitral tribunals remains however uncertain, as tribunals have historically continued to accept jurisdiction in intra-EU arbitrations;
• Finally, it is worth noting that a Bulgarian insurance company recently filed an ICSID claim against Romania on the basis of the Romania-Bulgaria BIT, despite the intra-EU BIT Termination Agreement and its Article 2(2) which provides that the sunset clauses of the intra-EU BITs are also terminated and should not produce legal effects. The case could have large practical implications for future intra-EU cases, as it is the first to decide whether the termination of intra-EU sunset clauses is effective.

PRACTICAL TIPS – Preparing and delivering your opening statement

As you step into the arbitral hearing, your opening statement is your first and perhaps most critical chance to make a lasting impression on the tribunal. It is not just about presenting your case, it is about engaging your audience, setting the narrative, and laying a solid foundation for your case:

• Preparation is key: Dive deep into your case, understanding every aspect and anticipating questions the tribunal might ask. Your opening statement is almost entirely within your control so use this advantage to build a narrative that is both compelling and comprehensive;
• Focus on the key issues: Resist the temptation to cover every minor detail. Concentrate instead on giving a comprehensive summary to the tribunal while focusing on the essential legal and factual issues that will drive the tribunal’s decision. This will keep your statement concise and ensure the tribunal’s attention is where you want it;
• Don’t just read: Engage with the tribunal. Make eye contact and speak directly to them to create a relation. Reading word for word from your notes can create a barrier, preventing that crucial connection. Instead, use your notes only as a guide to maintain a conversational and engaging tone;
• Carefully weigh the need for visual aids: PowerPoint presentations and visual aids can be double-edged swords. They can clarify complex points but also distract. If you choose to use them, make sure they are simple, clear, and directly relevant to the points you’re making. Remember, they should support your narrative, not overshadow it;
• Find your guiding principle and your roadmap: Your opening should have a clear theme or guiding principle that ties your arguments together (for instance, I once used particularly successfully the image of the “sprinkler sprinkled” to describe the opposing party’s actions!). Give the tribunal a roadmap that highlights the key points you will cover to help arbitrators follow your argumentation more easily;
• Anticipate the opposition’s arguments: Address potential counterarguments before they are made. This not only shows you’ve thoroughly considered all aspects of the case but also allows you to frame these issues on your terms and weaken your adversary’s position before they even present it;
• Rehearse for precision and confidence: This cannot be overstated: practice your opening statement to polish it and boost your confidence!

SECTORIAL NEWS – Hospitality

The hospitality industry, a dynamic and expansive sector, plays an essential role in global economics. This sector is characterized by ongoing tension between hotel owners’ pursuit of high returns and the operators’ focus on maintaining brand integrity. The complex nature of the hospitality sector, involving large investments, multiple stakeholders, and international operations, frequently gives rise to arbitration disputes. This dynamic has been further intensified by the COVID-19 pandemic:

• Typology of disputes:  Disputes include a wide range of issues, including the scope and validity of managements contracts and franchise agreements, allegations of mismanagement by owners against management companies (often related to financial performance), construction disputes in new hotel developments (delays, defects, cost overruns, etc.), labor disputes (such as the interpretation of collective bargaining agreements), and claims by franchisors of hotels failing to meet mandated standards,
• Intellectual property and branding disputes: Disputes over branding and trademarks in the hospitality sector often arise from collaborative efforts between hotel owners and operators to create distinctive hotel brands, highlighting the importance to set clear agreements between owners and operators to prevent and resolve potential conflicts,
• Management of disputes through mediation and expert appointment: An emerging trend in the resolution of hospitality disputes is the strategic use of mediation and the appointment of industry experts, in particular to deal with specific aspects of the operation of hotels such as alleged operational breaches relating to budget and performance,
• Latest case law: A recent significant case involved a Maldivian politician’s company, which paid over US$20 million to a Hilton affiliate to satisfy an ICC award. This concluded a dispute where the owner of a resort in the Maldives terminated its management agreement, alleging that Hilton had fraudulently misrepresented financial projections.

The hospitality sector also frequently faces investment arbitration disputes due to growing international investments and sometimes strained relations between host countries and foreign investors. This is shown by recent cases such as Northstar v. Montenegro, concerning the unsuccessful Ritz Carlton Montenegro project; Blue Sea Holdings v. Panama, where an UNCITRAL tribunal on 11 June 2024 found that the investors made prima facie case on the merits and allowed the case to proceed; and Almasryia v. Kuwait, marking the first ever ICSID ad hoc committee decision to annul an award under ICSID Rule 41(5) for lack of substantive reasoning in the tribunal’s award dismissing the investor’s US$320 million claim (thus reviving this claim).

Our firm recently advised a hotel owner on a multi-million USD dispute concerning a hotel development in Addis Ababa, Ethiopia. The dispute was governed by English law and resolved through a London-seated ICC arbitration in 2023, in collaboration with the Ethiopian law firm Dadimos & Partners LLP.

BY THE WAY

I’m thrilled to share a personal milestone: my appointment as a member of the ICC International Court of Arbitration for the 2024-2027 term, representing Romania!

My role as a member of the Court will include scrutinizing and approving arbitral awards, managing arbitrator fees and cost advances, and overseeing emergency proceedings. The Court’s responsibilities also include confirming, appointing, and replacing arbitrators as well as deciding on challenges made against arbitrators.

I look forward to serving on the Court alongside such remarkable colleagues and cannot wait for this incredible opportunity to contribute to the global arbitration community!