Beg S.p.a. v. Italy

Information Note on the Court’s case-law 251

May 2021

Beg S.p.a. v. Italy - 5312/11

Judgment 20.5.2021 [Section I]

Article 6

Civil proceedings

Article 6-1

Impartial tribunal

Independent tribunal

Lack of impartiality of an arbitrator, top official and counsel of parent entity of applicant’s opponent company in related civil proceedings: violation

Facts –The applicant company complained under Article 6 § 1 about the alleged lack of impartiality of one of the arbitrators, N.I., on a panel of the Arbitration Chamber of the Rome Chamber of Commerce (the “ACR”) rendering an arbitral award in the context of voluntary arbitration proceedings between itself and another Italian company, ENELPOWER S.p.a. In particular, it claimed that N.I. lacked impartiality by reason of his professional links with ENEL, ENELPOWER’s parent entity.

Law – Article 35 § 3 (a) (jurisdiction ratione personae): The domestic courts had examined the validity of the arbitral award, declaring it enforceable, and had examined and dismissed both the applicant’s request for withdrawal and its nullity appeals; under domestic law they had the jurisdiction to do so notwithstanding the parties’ agreement to renounce all the waivable remedies. Consequently, the Court had jurisdiction ratione personae as to the ACR’s impugned acts and omissions as validated by domestic courts.

Article 6 § 1: The Court first examined the question of waiver raised in the case. It found that the applicant could not be considered to have unequivocally waived either the guarantee of the arbitrators’ impartiality, as established under the ACR rules, or the expectation that the domestic courts would ensure the compliance of the arbitral award with the relevant Civil Procedure Code rules, including those relating to impartiality. In reaching this conclusion the Court took into account the following factors:

- The applicant had freely and voluntarily accepted the arbitration before N.I.’s appointment.

- The ACR Rules compelled arbitrators to indicate any relationship with the parties or their counsel that might have an impact on their independence and impartiality, and any direct or indirect personal or economic interest in the dispute’ subject matter. They did not, however, compel them to explicitly indicate the absence of such relationships and/or interests. Three of the arbitrators had expressly indicated the absence of such a reason whereas N.I. had simply accepted the appointment. In the absence of an explicit negative disclosure, one could legitimately presume that such relationships and/or economic interests did not exist. The fact that the applicant had not challenged the lack of such a disclosure did not demonstrate a waiver of its right to have its dispute settled by an independent and impartial tribunal.

- There was no concrete evidence that the applicant had in fact been aware of N.I.’s professional activities As soon as it had become aware of the professional links between N.I. and one of the parties, it had informed the ACR and the other arbitrators of its intention to lodge a withdrawal request, immediately did so with the Rome District Court and later challenged the award’s validity. Although its withdrawal requests had been dismissed as out of time, the complaint as to the award’s nullity stemming from a lack of impartiality of N.I. was held to have been regularly lodged in the arbitration proceedings and was dismissed after an examination of the merits. The case in this sense therefore radically differed from the situation in Suovaniemi and Others v. Finland (dec.).

Accordingly, the arbitration proceedings had to afford the safeguards provided for under Article 6 § 1 of the Convention.

As to merits of the applicant’s complaint, what was relevant was the relationship between the two companies and not their public or private nature. The Court then focused its assessment on the objective aspect of impartiality, as there was no evidence to suggest any personal prejudice or bias on N.I.’s part.  It held that N.I.’s impartiality had been capable of being, or at least appearing, open to doubt and that the applicant’s fears in this respect could be considered reasonable and objectively justified. In this respect, the following was relevant:

- First, N.I.’s role as Vice-Chairman and a member of Board of Directors of ENEL at a time when there had been ongoing negotiations between the applicant and ENEL.  Without speculating as to N.I.’s effective knowledge of these negotiations, given the business project’s importance and economic stakes, N.I.’s senior role in ENEL which had conducted the first negotiations and the preliminary agreement, and whose subsidiary would later oppose the applicant in the arbitration proceedings, seen from the point of view of an external observer, could legitimately give rise to doubts as to his impartiality.

- Second, N.I.’s role as ENEL’s lawyer in parallel domestic civil proceedings and, in particular, at least one of these which had overlapped with the arbitration proceedings. At that time ENELPOWER had been wholly controlled by and had still been an internal division within ENEL.

- Lastly, the Court also pointed to the subsequent change in domestic law under which the fact that an arbitrator regularly advised a party to arbitration proceedings or, inter alia, the company that controlled it, was a reason for disqualification. This provided for clearer and, if applicable, wider guarantees against a lack of impartiality in arbitration proceedings, such that, if this case had been domestically adjudicated after this reform the outcome might have been different.

Accordingly, the Court found a violation of Article 6 § 1 of the Convention.

Conclusion: violation (unanimously)

Article 41: EUR 15,000 in respect of non-pecuniary damage. Claim in respect of pecuniary damage dismissed.

(See also Suovaniemi and Others v. Finland (dec.), 31737/96, 23 February 1999; Pescador Valero v. Spain, 62435/00, 17 June 2003, Legal Summary; Mutu and Pechstein v. Switzerland, 40575/10 and 67474/10, 2 October 2018, Legal Summary)

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This summary by the Registry does not bind the Court.

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