14 December 2021

Arbitration and Corruption : What type of control do judges have over arbitration awards ?

On 29 September 2021, the French Supreme Court (Cour de cassation) overturned the famous Alstom decision of the Paris Court of Appeal dated 28 May 2019, which had ruled on an application for exequatur of an arbitral award. For the Cour de cassation, the Court of Appeal distorted the evidence submitted to it by misinterpreting the transcripts of the arbitration hearing.


Impact. – The case was referred back to the Versailles Court of Appeal, raising questions as to whether judges should carry out an extensive review regarding the veracity of allegations of fraud and corruption when deciding whether to enforce an arbitral award.


Cass. 1re civ., 29 sept. 2021, n° 19-19.769


I. A Retrospective on the Alstom Case.

The Alstom decision has been the subject of much debate due to the divergent approaches of the Swiss[1], English[2] and the French[3] courts regarding their level of review of arbitral awards when faced with corruption allegations[4]. The initial dispute concerned consulting contracts concluded between two subsidiaries of the Alstom group and a Chinese company Alexander Brothers (hereinafter “ABL”). The objective of the contracts was to assist Alstom in tendering for Chinese railroads. Although Alstom won all the tenders for which the consultant contracts had been signed, it refused to pay certain sums, alleging a criminal risk as these payments may have been used to bribe public officials.

As a result, in 2016, ABL filed for arbitration in Geneva before the International Chamber of Commerce. The Arbitral Tribunal rendered its award rejecting Alstom’s defense in which it argued that it had grounds to suspect corruption by ABL and ordered Alstom to pay the balance of the commissions due as it concluded that the circumstantial evidence of corruption did not meet the standard of proof required under Swiss law.

ABL obtained on 30 March 2016 an order for exequatur of the award in France, which Alstom challenged before the Paris Court of Appeal arguing that there was circumstantial evidence of corruption in the performance of the underlying contracts and that the sums paid under the award might be used to finance bribery and thus, the exequatur of such award in France would be contrary to public policy.

Following such challenge, the Paris Court of Appeal, after rendering a first award ordering the production of documents[5] and inviting the parties to file briefs regarding the allegations of corruption, rendered a subsequent decision, dated 28 May 2019, in which it overturned the order for exequatur and ruled that there was “serious, specific and consistent” evidence that the sums paid by Alstom to ABL financed and remunerated activities of bribery of public officials and thus that “the recognition or exequatur of an award which orders [the company] to pay sums intended to finance or remunerate corrupt activities was contrary to international public policy”[5].

This decision was consistent with its previous rulings[6], as it establishes a list of red flags and confirms the shift by French national courts, from a “minimalist” approach when assessing an award’s conformity to a more “in-depth” review of it, where corruption allegation are made.

Consequently, according to the Paris Court of Appeal ruling, it is for the judge, seized with an action based on a request of exequatur of an award, to investigate, in law and in fact, all the elements that make it possible to rule on the alleged illegality and to assess whether the recognition or enforcement of the award “effectively and concretely” violates international public policy[7].


II. The Overturning of the Alstom Decision of May 2019: a Possible Return to a Minimalist Control in Case of Corruption Allegations in Arbitration?

Following the decision of the Paris Court of Appeal to overturn the order for exequatur, ABL petitioned the French Supreme Court (hereinafter “Cour de cassation”). While ABL supported its appeal on three grounds of cassation, the Court only ruled on the second ground to quash and annul the decision rendered on 28 May 2019, as it considered that the evidence was distorted due to a misreading of the arbitral transcript[8].

The Court of Appeal had allegedly found in the transcript of the arbitration hearing that ABL (in the person of its director) refused to provide answers to questions regarding the obtaining of confidential documents and information, as well as questions regarding how ABL won the various tenders.

Yet, according to the Cour de cassation, the arbitration transcript show that these questions were answered and that ABL only refused to answer questions from the British authorities once the arbitration proceeding had been initiated. It thus concluded that the Court of Appeal distorted the evidence submitted by misreading the arbitral transcripts[9].

The case is consequently remanded to the Versailles Court of Appeal and this decision is already highly awaited by the arbitral community. Indeed, with the reading of the “attached grounds” (“moyens annexés”), ABL reproaches, among other things, that the Paris Court of Appeal carried out a new investigation on the merits of the case, whereas the judge should stay judge of the award and not of the case itself. It also implies that the Court failed to comply with the principle of non-revision of arbitral awards.

At a time when allegations of corruption in arbitration cases are becoming more and more frequent, the question of the nature of the control performed by the French judges before the exequatur of an award is therefore important since the effectiveness of such an award depends on it.

The decision of the Versailles Court of Appeal will not only clarify the French courts position respectively to the nature of the exercised control by judges when faced with cases involving allegations of fraud and corruption but also provide guidance to arbitrators as to the criteria to be met to ensure the effectiveness of their award.

Related content

Press review
Press review - Week of 19 September 2022
23 September 2022
Press review – Week of 19 September 2022
In this week's press review, you will discover the criminal initiatives at the European Union level announced by the President of the European Commission, and the new Fre...
Press review
Press review - Week of 5 September 2022
9 September 2022
Press review – Week of 5 September 2022
In this press review you will find two cases regarding the criminal prosecution of foreign nationals. First, the review addresses the conviction confirmed by the French C...
How to successfully conduct an investigation
8 September 2022
Webinar: How to successfully conduct an investigation?
Stéphane de Navacelle spoke at the EQS webinar on "Internal investigation in companies: our advice for successfully conduct an investigation!"
International Criminal Law, International Courts, and Judicial Affairs - ABA
5 September 2022
International Legal Developments 2021 in Review – American Bar Association
Navacelle co-author of the 2021 annual review of international legal developments of the American Bar Association International Law Section (ABA).
BDN 2022
14 July 2022
Bastille Day Newsletter 2022
On this 14th of July, lawyers at Navacelle offer you, as it does every year, a selection of noticeable events which occurred in France during the last 12 months in the fi...
The criminal division of the Court of cassation opens the way to an in concreto assessment of documents
14 July 2022
Attorney-client privilege: an in concreto assessment of documents, allowing to benefit from the protection of attorney-c...
In a significant decision dated 26 January 2022, the Criminal Division of the Court of Cassation reviewed the principles of attorney-client privilege and extended this pr...
Guidance on Internal Anti-Bribery and Corruption Investigations
22 June 2022
Guidance on internal anti-bribery and corruption investigations
Highlight of the first-ever guidelines issued by the French authorities on internal anti-corruption investigations by Ropes & Gray LLP and our partner Stéphane de Navace...
Press review
27 May 2022
Press review – Week of 23 May 2022
In this press review you will find the latest criminal justice news, including an AMF activity report, a cooperation protocol signed with TRACFIN's intelligence unit, as ...
Press review
Press review - week of 9 May 2022
13 May 2022
Press review – Week of 9 May 2022
This week's Navacelle press review includes the latest news on criminal law, business criminal law and criminal procedure. Thus, this review presents the decision of the ...
Press review
Press review - week of 2 May 2022
6 May 2022
Press review – Week of 2 May 2022
This week's Navacelle press review includes the latest news on criminal business law, criminal procedure, and international criminal law. The criminal chamber of the Cour...
Press review
Press review - Week of 25 April 2022
29 April 2022
Press review – Week of 25 April 2022
In this press review, you will find articles presenting the latest developments in criminal procedure, such as the liability of legal entities, specifically in the contex...
25 April 2022
A global trend: The introduction of Deferred Prosecution Agreement regimes across the World
Stéphane de Navacelle spoke at the International Law Section Annual Conference hosted by the American Bar Association.