THE PHENOMENON OF “DUE PROCESS PARANOIA”
AND COURT INTERVENTION IN ARBITRATION
Part 2: A Perspective on the principle of “Due Process” in Arbitral proceedings of French courts in the decision of the French Court of Appeal (Cour de cassation) in the case of Green Network v. Alpiq (2024).
In France, the procedure for requesting the annulment of an arbitral award can be put before the competent Court of Appeal, usually Paris Court of Appeals. Accordingly, Article 1520 of the French Code of Civil Procedure provides for five grounds for annulment of an international arbitral award: (i) Lack or Excess of the authority (ii) invalid constitution of the arbitral tribunal; (iii) Failure of the Arbitration tribunal to properly perform its duties; (iv) Violation of due process; (v) Violation of international public policy.
Accordingly, the principle of “Due Process” mentioned in Article 1510 of the Code of Civil Procedure (CCP) states that “regardless of the procedure applied, the arbitral tribunal must ensure that the parties are treated equally and must respect the principle of due process (principe de la contradiction).”
According to the 2022 ICCA report, the principle of “due process”, under French law, required that: [1]
(i) Each party must be given the opportunity to present its claims in fact and law, be informed of and have the chance to discuss the opposing party’s arguments;
(ii) No opinion or document should be submitted to the tribunal for consideration without being noticed to the other party;
(iii) No argument, whether in fact or law, shall be made by the arbitral tribunal automatically without a prior invitation to the parties to present their views.
In 2024, the French Court of Appeal (Cour de cassation) addressed the scope of judicial review over procedural decisions by an arbitral tribunal, specifically a request for documents.[2] The ICC arbitration, between an Italian company and a Swiss company, arose from a contractual dispute over the electricity supply. The losing party, the Italian company, sought to annul the award, arguing that the tribunal had wrongfully denied a document production request, thereby impacting its right to a fair defense under French law.
In this case, the Court emphasized that the arbitral tribunal’s refusal to make a request for documents did not violate the principle of “Due process”, as they had provided clear reasons for their decision and had autonomy in managing evidence. Therefore, the French Court rejected the Italian company’s request to annul the award, affirming that the right to a fair defense was breached, a clear violation of fundamental principles of fairness under French international public policy.
In another decision by the French Court, involving an arbitration where the claimants sought damages for loss of profits based on loss of opportunity, without giving the respondent an opportunity to submit evidence or legal arguments.[3] Accordingly, the arbitral tribunal replaced the respondent’s claim for loss of profits with compensation for loss of opportunity without informing the parties, thus violating due process principles.
Specifically, the respondent criticized the Arbitral Tribunal for accepting a complex KPMG expert’s report submitted late by the claimant after two years of discussion. Thus, the respondent needed time to respond to the KPMG reports. However, the Arbitral Tribunal did not invite the parties to comment and unilaterally changed the respondent’s claim from one based on loss of profits to one based on loss of opportunity - a ground not requested by the respondent. This change was not just a matter of damage assessment but altered the basis of OMI’s claim. Accordingly, the Arbitral tribunal violated the principle of due process by not notifying the parties thereof.
The decisions of the French courts have consolidated arbitrators’ autonomy in conducting proceedings and prevented the phenomenon of “Due Process Paranoia”. The French courts interpret the principle of “Due Process” in arbitration in a manner that the tribunal’s discretion over procedural matters should refrain from the Court’s interference unless there is a serious violation of fundamental principles of fairness.[4] Thus, French courts require arbitral tribunals to base their awards on legal and factual matters that the parties have actually submitted and debated before an arbitral tribunal, to ensure due process.
Vietnamese courts, by contrast, tend to intervene more deeply in the merits of arbitral cases than those of other countries, especially where there are significant procedural violations. While it is necessary to protect the legitimate rights of parties, excessive intervention can affect the independence and autonomy of arbitral tribunals, reducing the efficiency and viability of arbitration as a dispute resolution method.
Meanwhile, countries like Singapore, according to the award of the case China Machine New Energy Corporation v Jaguar Energy Guatemala LLC, apply the principle of “Due Process” cautiously. Singapore courts request claimants to demonstrate that a reasonable party in their position could not have predicted the rationale applied by the arbitral tribunal and that, with adequate notice, they might have persuaded the arbitral tribunal to reach a different conclusion. This reflects a high level of deference to the arbitral tribunal’s autonomy and a restrained approach to judicial intervention.
Compared to France, which does not follow the UNCITRAL Model Law, Vietnamese courts are more inclined to intervene in the merits of the case when evaluating whether there is a serious procedural violation. By contrast, French courts typically only interfere where there is a clear and serious violation of fundamental procedural fairness.
While the protection of “Due Process” is essential, it must be carried out with care and in an appropriate manner so as not to undermine the independence and effectiveness of arbitration. Courts should limit their intervention in the merits and intervene only when material violations that affect the legitimate rights of the parties.
Recommendations for Vietnamese courts in supervising and supporting arbitral proceedings:
When evaluating whether there has been a violation of “Due Process,” the court should place itself in the position of the arbitral tribunal. This means:
(i) The arbitral tribunal’s decisions should only be assessed based on the facts and information that were known and brought to the tribunal’s attention at the relevant time; and
(ii) The court should respect the arbitral tribunal’s discretion over procedural issues and should not interfere merely because the court might have acted differently.
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[1] ICCA Reports No. 10, Chapter ‘France’ in Does a Right to a Physical Hearing Exist in International Arbitration (2022)
[2] Green Network v. Alpiq, Judgment of the French Court of Cassation (First Civil Chamber) 21-20.140 – 18 Sept 2024
[3] Overseas Mining Investments v. Commercial Caribbean Niquel, Judgment of the French Court of Cassation (First Civil Chamber) 10-23.321 – 29 June 2011, cited in Herbert Smith Freehills, ‘Court of Cassation Confirms Setting Aside of Award for Lack of Due Process Where a Tribunal Had Based Its Finding on a Principle of Law Not Discussed During the Hearing’ (2011)
[4] Christina Mangani & Karim Zein, An(other) stand against due process paranoia, Simmons & Simmons, 6 Nov 2024
