Two individuals (spouses, referred to only as Monsieur Marcel X and Madame Eliane Y) concluded a supply agreement with Prodim SAS (Prodim) on 8 March 1994. Logidis SAS (Logidis) later assumed Prodim's obligations under the agreement. Pursuant to an ICC award rendered on 29 July 2002, the tribunal found that Mr X and Mrs Y were liable to pay Prodim and Logidis €102,726.85 for breach of the agreement.

An attempt by Mr X and Mrs Y to set aside the award was rejected by the Douai Court of Appeal on 24 July 2004. The French Supreme Court quashed that decision on 10 May 2006, sending the matter back to the Douai Court of Appeal.

The latter again refused to set aside the award in a decision rendered 18 June 2009. In rejecting arguments that one of the arbitrators lacked impartiality, the Court relied on the arbitrator's disclosure of the fact that he had been appointed by members of Logidis and Prodim's corporate group in the past. The Douai Court of Appeal found that, by accepting the arbitrator's appointment, Mr X and Mrs Y had acknowledged that previous appointments did not affect the arbitrator's impartiality. The Court also found that, the arbitrator having disclosed that there had been previous appointments, it was for Mr. X and Mrs. Y to inquire into the number of appointments, insofar as they believed this to be relevant. Furthermore, the Court found that the mere frequency of appointments (the arbitrator had been appointed 34 times by the same corporate group, including 18 appointments during 2002, the year the award was rendered) was not sufficient to demonstrate reliance on the appointing party, in particular given the arbitrator's work as a lawyer, professor, and part time arbitrator. Finally, the Court noted that the arbitral tribunal had rejected many of Prodim's and Logidis' claims, thus demonstrating their impartiality.

The Douai Court of Appeal's 18 June 2009 decision was, in turn, quashed by the Supreme Court. The matter was referred to the Reims Court of Appeal.

In its 31 January 2012 decision, the Reims Court of Appeal set aside the 2002 award. The Court rejected the argument by Prodim and Logidis that, by accepting the arbitrator's appointment despite his disclosure of previous appointments, Mr X and Mrs Y were estopped from raising the point as a basis for setting aside the award. It found that Mr X and Mrs Y's agreement to the arbitrator's appointment could only be seen as an acknowledgement that the facts, as known to them at the time, did not give raise issues of impartiality. It could not, however, be viewed as acquiescence in the very facts which, had they been known, would have given rise to a challenge.

On a related point, the Court rejected the argument that Mr X and Mrs Y had forfeited their right to raise issues of impartiality by failing to request further details of the arbitrator's previous appointments.

Similarly, the Court found that Mr X and Mrs Y's lawyer's knowledge of some of the arbitrator's previous appointments did not prevent them from raising the issue: the duty of disclosure is owed by the arbitrator to the parties themselves, and not their lawyer.

Contrary to the Douai Court of Appeal, the Reims Court of Appeal found that the number and frequency of appointments demonstrated an on-going business relationship between the arbitrator and the appointing party. Such a relationship could give rise to reasonable doubts as to the impartiality of the arbitrator, who therefore had a duty to disclose the facts to the other party. The Court emphasised that the test for determining the existence of a duty to disclose was not whether the arbitrator was impartial but, rather, whether there could be reasonable doubts as to his impartiality. In applying this test, the Court stressed that the decisive criterion in determining whether there was an on-going business relationship was the frequency of the appointments and not the quantum of fees collected by the arbitrator.

Finally, Prodim and Logidis had argued that the arbitrator's duty to disclose to an adverse party must be balanced with his duty of confidentiality toward the parties that had made the previous appointments. In so doing, they emphasised that the violation of the duty of confidentiality could carry criminal sanctions. The Court rejected this argument as well, noting that the duty to disclose required only disclosure of the number of appointments and not the details of each previous appointment, and that such duty could not be undermined by invoking the duty of confidentiality.

The court therefore set aside the award on two grounds, the irregularity of the appointment of the arbitral tribunal and the violation of due process (as the lack of disclosure had prevented Mr X and Mrs Y from exercising their right to challenge the arbitrator), amounting to a violation of procedural public policy.

The issues of impartiality and independence of arbitrators and the extent of their duty to disclose information to the parties have been the subject of extensive analysis of late, both internationally and in France. The London Court of International Arbitration's decision to publish abstracts of its decisions on challenges of arbitrators (Arbitration International, Vol. 27(3) (2011)) has provided a trove of new material for analysis by international legal scholars. In France, similar issues are raised in the Tecnimont dispute, which is currently under appeal to the Supreme Court, see Legal updates, Reims Court of Appeal sets aside ICC award for chairman's lack of independence and French Supreme Court reverses Court of Appeal decision to annul ICC award.

Although the circumstances of the present case (in particular, the sheer number and frequency of appointments that had not been disclosed) may seem to give rise to an obvious challenge to the arbitrator's impartiality, the decision nonetheless suggests that French courts may apply a relatively exacting standard to such questions. For example, the Court of Appeal was unconvinced by arguments that a partial disclosure shifted the burden to the non-appointing party to make further inquiries. The Court also relied solely on the frequency of the arbitrator's appointments as establishing a business relationship, and did not require the challenging party to demonstrate that the quantum of fees was sufficient to create any kind of dependency as between the arbitrator and the appointing party. Such findings underline the importance of complete disclosure by arbitrators of any previous appointments or other circumstances that may give rise to questions as to their impartiality both before and during the arbitration.