MARKET COMMENTARY 37
Meydan’s applicationwas rejected. In rejecting it, Ramsey J noted that under English lawa court will only refuse to recognise and enforce an arbitral award if the grounds set out in section 103(2) of the Arbitration Act are clearlymade out. He ruled that Meydan had not raised any groundwhich had a real prospect of success. In particular, Ramsey J noted that: • Meydan could not rely upon allegations of bribery because the evidence to establish the alleged bribery could have been deployed prior to the arbitral award beingmade; • Before a party can rely on evidence of fraud in an application to set aside leave to enforce an award, the party alleging the fraudmust show that the evidence to establish the fraud was not available to it at the time of the arbitral hearing; and • Simply challenging the award in the Dubai courts was insufficient on its own to prevent enforcement. Under DIAC Rules, the awardwas binding asmatters stood. “JUDGE THE AWARD, NOT THE MERITS” (MSchneider Schaltgeratebau Und E lektroinstallationen GmBH v CPL Industries Limited 2 ) Here, arbitrationwas commenced by three Nigerian companies against Schneider (an Austrian company) under ICC Rules in Paris. Schneider alleged bribery and corruption on the part of the Nigerian companies. It was alleged that the daughter of the then President of Nigeria (who was also a state commissioner) had signed contracts under a false name and had received gifts from the Respondent in violation of Nigerian anti-corruption laws. The sole arbitrator found in favour of the Nigerian companies including that the allegations of briberywere unfounded and ordered Schneider to pay damages and the costs of the arbitration. Schneider applied to the Court of Appeal in Paris to have the award set aside relying on (amongst other reasons) the fact that granting the enforcement of the awardwould violate French international public policy as the award itself contributed to acts of corruption. To order payment of sums due under the contract would amount to enforcing an illegal bargain. In considering the application, the Paris Court of Appeal limited itself to the question of whether recognition or enforcement would violate international public policy andwhether such violation could be shown to be “flagrant, effective and concrete” , an approach consistent with previous judgments of the Paris Court of Appeal and the French Supreme Court. Ultimately, the Court of Appeal dismissed the application ruling that the submissions in relation to corruption amounted to an attempt by Schneider to reopen the substance of the dispute which exceeded the narrow scope applicable in analysing such applications. In a Judgment dated 12 February 2014, the French Supreme Court upheld the Court of Appeal judgment despite allegations that the underlying contract was tainted by corruption. The Supreme Court confirmed that the judge’s role in this instance was to judge the award and not to re-judge themerits of the dispute. The decision that violation of public policymust be “flagrant, effective and concrete” has been criticised by commentators as being overly narrow, thereby increasing the risk of recognising awards that give effect to dealings of corrupt foreign officials. Indeed, three Paris Court of Appeal judgments following the ruling in Schneider suggest that the Court may adopt amore thorough review of the underlying arbitrationwhen considering the challenge to enforcement: Sté Gulf Leaders for Management and Services Holding Company v SA Credit Foncier de France 3 ; Congo v. SA Commissions Import E xport 4 ; and SASMan Diesel & Turbo
France v Sté Al Maimana General Trading Company Ltd 5 . It remains to be seen if the French Supreme Court supports that position and how other national courts react whichwill be the subject of a future update. The above cases demonstrate not only the frequency of these types of challenges but also the tension between a court’s role to uphold international public policy and to ensure that proceedings to set aside do not function as a backdoor appeal allowing a re-examination of themerits of a dispute. REQUIREMENT FOR PERSUA SIVE E VIDENCE (Beijing SinozontoMining Investment Co Ltd v Goldenray Consortium(Singapore) Pte Ltd 6 ) In April 2014, the Singapore High Court dismissed Goldenray’s challenge to the enforcement of an arbitration award issued under the CIETAC 7 Rules. Goldenray had challenged an order permitting the Beijing SinozontoMining Investment Co (BSM) to enforce the award in Singapore, claiming that the awardwas tainted by fraud or corruption and so its enforcement would be contrary to public policy. In fact, Goldenraymade the very serious allegation that BSMhad entered into an improper arrangement with the tribunal itself to issue an award in its favour. The Singapore High Court confirmed that the term “public policy” would extend to an award obtained by corruption, bribery or fraud. However, the burden of proof fell on Goldenray to establish, on the balance of probabilities, that there was such an improper arrangement between a party and the tribunal. The Court dismissed the challenge on the basis that Goldenray had failed to produce sufficient evidence of an improper arrangement. Whilst the balance of probabilities test was to be applied, the Court concluded that a party complaining of fraudmust adduce evidence that is more persuasive than that required for negligence and is commensurate with the gravity of the allegations. SUMMARY: ARE THE COURTS ADOPTING A COMMON APPROACH? The judgments considered here were handed down in key arbitration jurisdictions within threemonths of each other andwill possibly be considered by other national courts hearing enforcement proceedings. The decisionsmay be interpreted as leaning towards non-intervention in setting aside proceedings, possibly at the expense of international public policy concerns. Certainly, the cases reaffirm that courts are reluctant to go into themerits of an arbitration that has already been adjudicated, drawing a distinction between their role in assessing the enforcement of the award and themerits of the case that led to the award beingmade. The courts are not willing to permit any attempts via the “back door” to reviewmerits or consider submissions and evidence which should have been put to the Tribunal. In particular, it would appear very difficult to challenge an award based on bribery, corruption and fraud if the facts were available at the time of the arbitration but no such allegations weremade or if such allegations weremade andwere unsuccessful. One factor that remains uncertain is the burden of proof said to applywhen challenging the enforcement of an award on the basis of corruption, fraud or bribery. The cases considered here suggest that the burden is on the challenging party to go beyond amere balance of probabilities test; and demonstrate that the violationmust be flagrant, effective and concrete.
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