France. In S.A. Auto Guadeloupe Investissements v. Colombus

Acquisitions Inc., S.A.S. Colombus Holdings France, Caribbean Fiber

Holdings LP, in a judgment dated October 14, 2014, the Paris Court of

Appeal vacated an order granting exequatur (recognition) of an arbitral

award on the ground of an irregularity in the constitution of the arbitral

tribunal stemming from an undisclosed conflict of interests.

 

The appellant (the Respondent in the original arbitral proceedings),

S.A. Auto Guadeloupe Investissements ("AGI"), jointly owned

Global Caribbean Fiber SA ("GCF") with Caribbean Fiber Holdings

LP ("CFH"). CFH was wholly-owned by Leucadia National Corp

("Leucadia").

 

In 2008, CFH and AGI began negotiating the sale of GCF's share

capital to Colombus Acquisitions Inc. and Colombus Holdings France

(together "Colombus"). Having agreed a memorandum of terms fixing

an initial deadline for reaching a definitive agreement, the parties

concluded a second memorandum of terms extending the deadline to

March 31, 2009. This provided for ICDR arbitration before a sole

arbitrator.

 

On May 20, 2009, AGI announced that it was abandoning the sale,

alleging that the memorandum of terms was not binding. On July 10,

2009, Colombus instituted arbitration proceedings against AGI seeking

specific performance and payment of a $990 million indemnity. CFH

joined itself to these claims and also sought punitive damages.

 

In September 2009, a sole arbitrator was appointed. He made a

written declaration of independence stating that "a partner in my

firm's Toronto office has represented [Leucadia] in Canada in respect

of Canadian based matters over a matter of years. I understand that at

present there are no matters in respect of which my firm is currently

providing advice to Leucadia".

 

In December 2010 and January 2011, details of a deal in which the

sole arbitrator's firm had represented Leucadia were published on the

firm's website and in a legal industry magazine. The deal, completed

in December 2010, was for the sale of an interest in a copper mine

worth $575 million.

 

In March 2011, the sole arbitrator issued an arbitral award which

held that the parties had concluded a binding agreement which AGI

had breached. The award rejected the claims for specific performance

and AGI's counterclaims, deferring the issues of damages and costs to

a later award. On June 20, 2013, the Paris Tribunal de grand instance

issued an order granting exequatur of the award.

 

AGI appealed against the order on the grounds that: (i) there had

been an irregularity in the constitution of the arbitral tribunal and a

breach of international public policy, as the sole arbitrator had not

disclosed the links between his firm and two of the parties to the

proceedings; (ii) the clause granting the sole arbitrator jurisdiction

was limited to disputes concerning the negotiations and did not extend

to disputes regarding the transfer of shares; and (iii) the enforcement

of the award in France would breach international public policy in
respect of insolvency proceedings.