in its so-called
“arrêt Garnier” dated 14 February 2024, the French Cour de Cassation upheld the
Paris Court of Appeal’s decision to reject a claim for damages against an
arbitrator who had belatedly rendered an award thereby leading to its
annulment.
In a nutshell: the
claimant prevailed in domestic arbitration proceedings and the respondent was
ordered to pay a certain amount of damages to the claimant. Since, however, the
award was issued belatedly, the respondent prevailed in set aside proceedings
before the French courts and the latter ruled upon the merits of the dispute.
At this juncture, however, the claimant only obtained a much lower sum of
damages than that which it had obtained in the arbitration proceedings.
The aggrieved claimant
then sued the arbitrator and its insurer, claiming damages amounting to, at
least, the difference between those obtained in the arbitration and those
obtained before the national court, framing this head of losses as a loss of
opportunity (perte de chance). Its request was, however, rejected both on
appeals and by the French supreme court. Both courts decided that, even though
the arbitrator committed a contractual breach by issuing the award late, the
claim could not prevail because there was no compensable loss nor a causal link
between the breach and the alleged loss.
This was because the
concept of loss of opportunity only allows a claim for a fraction of the
damages suffered, whereas in this case the claimant was in reality seeking full
compensation. And, in any event, because the reduction in damages resulted not
from the arbitrators’ fault, but from the decision of the national court before
which the claimant was able to assert its rights.
Overall, this decision
provides interesting teachings for all arbitration practitioners and parties
which have recourse to it, as it sheds further light on the conditions under
which arbitrators can be held liable, and the monetary exposure (if any) which
they face when failing to discharge their duties in accordance with their
contractual mandate.