Procedural Background

This judgment (arrêt) of the Paris Court of Appeal (Cour d'appel de Paris) addresses an application for annulment filed by the Russian Federation against an arbitral award rendered on 11 December 2023. The challenged award, issued in a PCA-administered arbitration (PCA Case No. 2016-14), had dismissed the Russian Federation's application for revision of a final award dated 26 November 2018.

Grounds for Annulment and Parties' Positions

The Russian Federation sought annulment primarily on the ground of irregular constitution of the arbitral tribunal, pursuant to Article 1520, 2° of the French Code of Civil Procedure. The core of the challenge concerned the alleged lack of impartiality of co-arbitrator Charles N. Brower.

The applicant argued that Mr. Brower's impartiality was compromised by his co-signing of an amicus curiae brief in a separate US court proceeding involving the Russian Federation (the Yukos case). The Russian Federation contended that this brief, submitted shortly after the award under review was rendered but while the arbitral tribunal was still seized of the case (costs having been reserved), contained highly critical and pejorative statements regarding Russia's procedural conduct. This, it argued, created a reasonable doubt as to the arbitrator's impartiality.

The respondent, JSC Oschadbank, countered that the challenge was unfounded, asserting that the amicus brief was filed in a different case, did not demonstrate any objective link of dependence, and was insufficient to establish a lack of impartiality.

The Court's Analysis and Decision

The Court of Appeal found the application for annulment to be well-founded. The Court's reasoning focused on the objective appearance of impartiality. It held that an arbitrator's duties of independence and impartiality persist for the entire duration of the arbitral proceedings.

The Court determined that Mr. Brower's participation as an amicus curiae in support of parties adverse to the Russian Federation in another matter, while the instant arbitration was still pending, was problematic. The Court analyzed the content of the amicus brief and found it to be not merely a legal commentary but a strong, affirmed position against the Russian Federation, denouncing its procedural strategies as 'destructive' and 'abusive'. The Court noted the close temporal proximity between the rendering of the award and the submission of the brief, concluding that the arbitrator's critical state of mind necessarily pre-dated the award. The Court held that an arbitrator taking such a public and critical position against a party to the arbitration, even in a separate proceeding, is sufficient to create a reasonable doubt in that party's mind as to the arbitrator's impartiality. This circumstance was deemed to have tainted the constitution of the tribunal.

Dispositive

Consequently, the Paris Court of Appeal annulled the arbitral award of 11 December 2023. It further ordered JSC Oschadbank to pay the Russian Federation's legal costs.