Commercial Court finds fraud in the conduct of ICC arbitration

27/01/12

For the first time in an application under section 68 of the Arbitration Act 1996, the High Court has found that there was fraud in the conduct of an international arbitration. Flaux J, sitting in the Commercial Court, so held in Chantiers de L'Atlantique SA v Gaztransport & Technigaz SAS, [2011] EWHC 3383 (Comm) in which the claimant, CAT (part of the Alstom Group), applied under section 68(2)(g) of the Arbitration Act 1996 to set aside an arbitration Award on the ground that it was obtained by fraud on the part of the respondent, GTT.

Both parties were major French engineering companies. The underlying dispute involved the design and construction of liquefied natural gas carriers, built by CAT to carry liquefied natural gas held at cryogenic temperatures (-163°C) in vast insulated tanks.

Despite the fact that the relevant contract provided for London arbitration, there had in fact been an ICC arbitration held in Paris, in French, before French and Belgian arbitrators, where it was held that the key contract was governed by French law. Nonetheless, London remained the chosen seat of the arbitration, and so the Court had jurisdiction to hear CAT's section 68 application.

After a 12 day hearing, involving cross examination of lay and expert witnesses, the Judge accepted CAT's submission that GTT had presented dishonest evidence to the arbitrators. In particular, he found that GTT's head of research and development had deliberately concealed from the tribunal the existence of certain tests and results, and concluded that "his evidence both before the tribunal and before this court was dishonest."

However, the Judge went on to dismiss CAT's application under section 68(2)(g) on causation grounds, finding that CAT had not demonstrated that the Award was ‘obtained by fraud'.

The judgment is here.