Incomplete Disclosure May Not Be Enough: Repeated Appointments Can Put an Arbitral Award at Risk
French Court of Cassation – First Civil Chamber
Decision dated 20 October 2010
Pourvoi No. 09-68.997
Somoclest Bâtiment v. DV Construction
Arbitrator independence is not protected merely by making a generic disclosure.
A significant decision of the French Court of Cassation illustrates that where an arbitrator has been repeatedly and systematically appointed by companies belonging to the same corporate group, the arbitrator may be required to disclose the full extent of that relationship. A vague statement that the arbitrator has been “regularly appointed” in similar disputes may not be sufficient where the actual pattern of appointments is far more extensive.
The case is particularly important for arbitrators because it addresses a practical question that frequently arises in specialised industries:
When does repeated appointment stop being ordinary professional experience and become a circumstance that must be disclosed because it may affect the appearance of independence?
Background to the Dispute
Somoclest Bâtiment entered into a subcontract with DV Construction. The contract contained an arbitration clause providing a list of four possible arbitrators.
After a dispute arose, one of the individuals appearing on that list was appointed as sole arbitrator.
Before accepting the appointment, the arbitrator disclosed that he had been regularly appointed in disputes of this type, particularly disputes involving companies within the Bouygues group and their subcontractors.
The arbitration proceeded and an award was rendered.
Somoclest subsequently sought to have the award set aside.
Its challenge focused on the arbitrator’s independence and, more specifically, on the adequacy of his disclosure.
The issue was not simply that the arbitrator had previously been appointed in some comparable disputes. The record showed that companies belonging to the same corporate group had previously appointed him in 51 arbitration proceedings.
That difference became central to the case.
The Court of Appeal’s Approach
The Court of Appeal rejected the application to set aside the award.
Its reasoning was essentially that the arbitrator had already informed the parties that he was regularly appointed in this type of dispute involving companies from the same group.
Somoclest had not requested further information, had not raised a reservation during the arbitration and had continued participating in the proceedings.
The Court of Appeal therefore treated Somoclest as having implicitly waived its right to complain about the arbitrator’s independence after the award was rendered.
The French Court of Cassation took a different view.
The Court of Cassation: Disclosure Must Be Meaningful
The Court of Cassation focused on the purpose of an arbitrator’s duty of disclosure.
Disclosure is not merely a procedural formality.
Its function is to place the parties in a position where they can make an informed assessment of whether circumstances exist that justify challenging the arbitrator.
The Court held that the systematic nature of the appointments, their frequency, their regularity over a long period and their occurrence in comparable contracts had created what it described as a “courant d’affaires” — effectively, an ongoing stream of business — between the arbitrator and companies belonging to the same group.
In those circumstances, the arbitrator was required to disclose the full extent of that situation so that the other party could properly exercise its right to challenge the arbitrator.
Why Was “I Am Regularly Appointed” Not Enough?
This is one of the most practically significant aspects of the judgment.
There is a substantial difference between telling a party:
“I have previously been appointed in similar disputes.”
and informing that party that companies from the same corporate group have appointed the arbitrator in 51 arbitration proceedings.
The first statement may suggest ordinary experience in a specialised field.
The second reveals a pattern that may raise materially different questions concerning independence.
The adequacy of disclosure therefore cannot be assessed only by asking whether the arbitrator mentioned the existence of some prior relationship.
The more important question is whether the disclosure gave the parties enough information to understand the nature, frequency and significance of that relationship.
Where the omitted facts would materially change the way a party assesses the relationship, a generic disclosure may be insufficient.
Repeated Appointments and a “Stream of Business”
The expression courant d’affaires is particularly important.
The Court did not focus on a single previous appointment.
Instead, it considered the cumulative effect of several factors:
systematic appointments by companies within the same corporate group;
the frequency of those appointments;
their regularity over a prolonged period; and
their occurrence in disputes arising from comparable contracts.
Taken together, those circumstances could create an ongoing professional relationship between an arbitrator and a group of companies.
This does not necessarily mean that repeated appointment automatically proves actual bias.
That distinction is critical.
The Court’s concern was that the circumstances were sufficiently significant that they had to be fully disclosed, allowing the affected party to decide whether to exercise its right of challenge.
Who Bears the Burden of Investigating the Arbitrator?
The Court of Appeal had placed considerable weight on the fact that Somoclest had not requested additional explanations after receiving the arbitrator’s initial disclosure.
The Court of Cassation rejected that approach.
The disclosure obligation rests primarily on the arbitrator.
A party should not be required to investigate independently in order to discover material circumstances that the arbitrator should have disclosed in the first place.
This principle matters because meaningful consent to an arbitrator’s appointment requires meaningful information.
A party cannot realistically decide whether to challenge an arbitrator if the material dimensions of the relationship have not been revealed.
The Connection Between Disclosure and Waiver
Waiver is frequently raised when a party challenges an arbitrator only after an unfavourable award.
Generally, a party that knows the relevant facts and nevertheless proceeds without objection may lose the ability to rely on them later.
But this case illustrates an important qualification:
waiver assumes knowledge.
If the disclosure itself did not reveal the material extent of the circumstances, the fact that the party did not immediately challenge the arbitrator does not necessarily establish an informed waiver.
A party who knows that an arbitrator has been appointed “regularly” does not necessarily possess the same information as a party who knows that the arbitrator has received 51 appointments from companies within the same corporate group.
Irregular Constitution of the Tribunal
The Court of Cassation concluded that the Court of Appeal had applied the relevant principles incorrectly.
It therefore quashed the appellate judgment that had rejected the annulment application and remitted the matter for reconsideration.
That procedural point is important.
The Court of Cassation did not simply declare the arbitral award annulled in the operative part of its judgment. Rather, it overturned the appellate decision that had found the disclosure sufficient.
A Practical Lesson for Arbitrators
The decision provides a useful disclosure principle:
When in doubt, disclose enough for the parties to assess the relationship — not merely enough to acknowledge that some relationship exists.
Where repeated appointments are potentially material, an arbitrator should consider disclosing matters such as:
the approximate number of previous appointments;
whether they came from the same party or companies within the same group;
the period over which those appointments occurred;
whether the disputes arose from similar contractual arrangements; and
whether the appointments remain ongoing.
The objective is not unnecessary disclosure of every remote professional interaction.
The objective is to ensure that information capable of materially affecting an informed assessment of independence is not concealed behind broad or ambiguous language.
A Practical Lesson for Parties and Counsel
The case also carries an important lesson for parties.
Once meaningful disclosure has been made, objections should generally be raised promptly.
A party that receives sufficiently detailed information and proceeds without objection may later face a waiver argument.
However, where the disclosure materially understates the true nature or extent of the relationship, the situation is different.
The quality of the disclosure becomes central to determining whether the party genuinely possessed enough information to make an informed decision.
Repeated Appointment Does Not Automatically Equal Bias
One qualification should be emphasised.
The judgment should not be reduced to the proposition that multiple appointments automatically establish partiality.
That would be too broad.
The French Court’s reasoning focused on the combination of systematic appointments, frequency, regularity, duration and similarity of the underlying contracts.
The concern was the resulting stream of business and the arbitrator’s obligation to disclose that situation fully.
Accordingly, the legal issue is highly contextual.
A handful of unrelated appointments over many years may present a very different situation from dozens of recurring appointments generated by the same corporate group in substantially similar disputes.
Conclusion
The decision in Somoclest Bâtiment v. DV Construction remains an important illustration of the relationship between arbitrator disclosure, independence and the validity of the arbitral process.
Its central lesson is straightforward:
Disclosure must be sufficiently complete to allow the parties to make an informed decision about the arbitrator’s independence.
A general statement that an arbitrator has been “regularly appointed” may not satisfy that obligation where the true circumstances involve dozens of systematic appointments by companies belonging to the same corporate group over a prolonged period.
For arbitrators, the lesson is to disclose material relationships with sufficient specificity.
For parties, the lesson is to act promptly once adequate disclosure is received.
And for arbitration practitioners generally, the case demonstrates that the integrity of tribunal constitution begins not merely with independence itself, but with transparency sufficient to permit that independence to be assessed.
References
Cour de cassation, Première chambre civile, 20 October 2010, Pourvoi No. 09-68.997, Somoclest Bâtiment v. DV Construction.
Related French Court of Cassation decision, 20 October 2010, Pourvoi No. 09-68.131.
Hazem Ali, Arabic legal commentary discussing arbitrator disclosure obligations, repeated appointments, and the Somoclest Bâtiment v. DV Construction decision.
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