AS TO THE ADMISSIBILITY OF
Application No. 28101/95
by Lila Marianne NORDSTRÖM-JANZON
and Aira Marja NORDSTRÖM-LEHTINEN
against the Netherlands
The European Commission of Human Rights (Second Chamber) sitting
in private on 27 November 1996, the following members being present:
Mrs. G.H. THUNE, President
MM. J.-C. GEUS
G. JÖRUNDSSON
A. GÖZÜBÜYÜK
J.-C. SOYER
H. DANELIUS
F. MARTINEZ
M.A. NOWICKI
I. CABRAL BARRETO
J. MUCHA
D. SVÁBY
P. LORENZEN
E. BIELIUNAS
Ms. M.-T. SCHOEPFER, Secretary to the Chamber
Having regard to Article 25 of the Convention for the Protection
of Human Rights and Fundamental Freedoms;
Having regard to the application introduced on 12 August 1994 by
Lila Marianne NORDSTRÖM-JANZON and Aira Marja NORDSTRÖM-LEHTINEN
against the Netherlands and registered on 3 August 1995 under file
No. 28101/95;
Having regard to the report provided for in Rule 47 of the Rules
of Procedure of the Commission;
Having deliberated;
Decides as follows:
THE FACTS
The first applicant was born in 1931 and resides at Espoo,
Finland. The second applicant was born in 1932 and resides at Red Bank,
New Jersey, United States of America. Both applicants have Finnish
nationality. Before the Commission they are represented by Mr. Peter
Roorda, a lawyer practising in Amsterdam, the Netherlands.
The facts of the case, as submitted by the applicants, may be
summarised as follows.
A. Particular circumstances of the case
On 1 April 1981 Meri Shipping Company Oy and Meri Line Oy, two
companies under Finnish law, entered into a joint-venture agreement
with Van Nievelt Goudriaan & Co. B.V. (hereafter: "Nigoco"), a company
under Dutch law. This agreement, and also a Deed of Settlement entered
into subsequently, provided for arbitration according to the rules of
the Netherlands Arbitration Institute (Nederlands Arbitrage Instituut).
In February 1982 the two Finnish companies were dissolved. The
trustees in liquidation assigned any possible claims which the
dissolved companies might have had on Nigoco to the applicants.
On 14 July 1984 the applicants requested the Netherlands
Arbitration Institute to arbitrate in the disputes which had arisen
from the above-mentioned agreements.
In November 1984 three arbitrators were appointed by the
Netherlands Arbitration Institute - one of them being Mr. W. -, and
they all accepted their appointments.
Following a hearing on 21 January 1986, the arbitrators rejected
all claims of the applicants on 2 July 1986.
On 2 October 1986 the applicants requested the Regional Court
(Arrondissementsrechtbank) of The Hague to quash the arbitral award on
procedural and other grounds.
The Regional Court rejected the applicants' request on
19 October 1988.
Against this judgment the applicants filed an appeal with the
Court of Appeal (Gerechtshof) of The Hague. The applicants stated,
inter alia, that the arbitrator Mr. W. could not be regarded as
independent and impartial since he had worked as a lawyer for a
controlling shareholder of Nigoco during a period which had started in
October 1983 and had lasted until after the beginning of the
arbitration proceedings. They invoked Article 6 of the Convention. The
applicants stated furthermore that if they had had knowledge of these
facts and circumstances prior to the arbitration proceedings, they
would not have accepted the appointment of Mr. W. as arbitrator. The
applicants argued that for these reasons the arbitral award should be
quashed on the ground that it had been rendered contrary to public
order interests.
On 3 September 1992 the Court of Appeal dismissed the appeal. In
its judgment the Court considered, inter alia, that there were no
objectively justified reasons for questioning the independence and
impartiality of Mr. W.
The applicants filed an appeal in cassation against this judgment
with the Supreme Court (Hoge Raad). They argued that the existence of
ascertainable facts which may give the appearance that an arbitrator
lacks independence and impartiality constitutes a ground on which an
arbitral award shall be quashed as being contrary to public order
interests.
The Procurator General (Procureur-Generaal) at the Supreme Court,
in his advice to this Court on 17 December 1993, proposed the quashing
of the judgment of the Court of Appeal. He recalled that an arbitral
award could be quashed on grounds of public order interests when it had
been reached in breach of fundamental principles of procedural law. In
his opinion, these principles included the independence and
impartiality of an arbitrator. In this respect he referred to the
grounds on which an arbitrator could be challenged (wraking) during
arbitration proceedings. In view of the fact that in the present case
there was a legitimate reason to fear that Mr. W. had lacked
independence and impartiality, a fear which could be regarded as
objectively justified, he considered that the arbitral award should be
quashed.
However, on 18 February 1994 the Supreme Court upheld the
judgment of the Court of Appeal. The Supreme Court stated that in
decisions on whether or not, in the course of arbitration proceedings,
the challenge of an arbitrator should be accepted, mere appearances
could play an important role. Nevertheless, once the arbitral award had
been rendered and a challenge or voluntary withdrawal (verschoning) of
an arbitrator was no longer possible, a stricter measure had to be
applied when deciding whether public order interests had been breached.
The Supreme Court considered that after the termination of arbitration
proceedings an arbitral award could only be quashed as being contrary
to public order interests if either facts and circumstances had been
revealed on the ground of which it had to be assumed that the
arbitrator had in fact not been independent or impartial, or the doubts
as regards his independence or impartiality were so grave that the
disadvantaged party could not be required to accept the arbitral award.
As the applicants in their appeal in cassation had argued that the
arbitral award should be quashed in view of the mere appearance of a
lack of independence and impartiality, the Supreme Court, applying the
stricter measure outlined above, rejected their appeal.
B. Relevant domestic law and practice
In the present case the applicants requested the Regional Court
to quash the arbitral award on 2 October 1986. This means that the
rules on arbitration which were in force until 1 December 1986 are
applicable in the present case.
Section 649 (old) of the Code of Civil Procedure (Wetboek van
Burgerlijke Rechtsvordering) states the grounds on which an arbitral
award may be quashed. Although in this Section public order interests
are not explicitly mentioned as such a ground, it followed from
established case-law of the national courts that it was accepted as
such (see e.g. HR 8 November 1963, NJ 1964, 139). At present, this
ground has been enacted in Section 1065 para. 1 (e) of the Code of
Civil Procedure.
Pursuant to Section 626 para. 3 (old) of the Code of Civil
Procedure the reasons for challenging an arbitrator are the same as
those which apply to the challenge of a judge. At present, Section 1033
para. 1 of the Code of Civil Procedure provides that in order
successfully to challenge an arbitrator there has to be a legitimate
doubt as to his independence and impartiality.
COMPLAINTS
The applicants complain that their right to a fair trial as
guaranteed by Article 6 para. 1 of the Convention was violated since
the national courts upheld an arbitral award which had been given by
three arbitrators, one of whom allegedly lacked independence and
impartiality.
THE LAW
The applicants complain of a violation of Article 6 para. 1
(Art. 6-1) of the Convention in that one of the arbitrators in the
arbitration proceedings at issue had lacked independence and
impartiality.
Article 6 para. 1 (Art. 6-1) reads, insofar as relevant, as
follows:
"In the determination of his civil rights and obligations ...
everyone is entitled to a fair ... hearing ... by an independent
and impartial tribunal ..."
The Commission notes in the first place that the proceedings of
which the applicants complain are arbitration proceedings.
In the present case the arbitration was based on a joint-venture
agreement and a subsequent Deed of Settlement concluded between the
parties concerned. The arbitration was thus based on a voluntary
agreement according to which disputes between the parties should not
be settled by the ordinary courts but under a special arbitration
system. Consequently, there was a renunciation by the parties of a
procedure before the ordinary courts satisfying all the guarantees of
Article 6 (Art. 6) of the Convention.
The Commission furthermore recalls that in the Deweer case, the
Court, considering that an applicant "waived his right to have his case
dealt with by the tribunal", noted that:
"In the Contracting States' domestic legal systems a waiver ...
is frequently encountered ... in civil matters, notably in the
shape of arbitration clauses in contracts ... The waiver, which
has undeniable advantages for the individual concerned as well
as for the administration of justice, does not in principle
offend against the Convention (Eur. Court HR, Deweer v. Belgium
judgment of 27 February 1980, Series A no. 35, pp. 25-26,
para. 49)."
The Court nevertheless specified that in such a case, the absence
of constraint is one of the conditions to be satisfied (ibid.).
The Commission notes that in the present case it has not been
alleged that the arbitration agreement was concluded under duress.
However, the Commission considers that account must be taken not
only of the arbitration agreement between the parties and the nature
of the private arbitration proceedings, but also of the legislative
framework providing for such proceedings in order to determine whether
the domestic courts retained some measure of control of the arbitration
proceedings and whether this control has been properly exercised in the
concrete case (cf. No. 10881/84, Dec. 4.3.87, D.R. 51, p. 83). The
Commission notes in particular that Dutch law contains rules which
permit the courts to quash arbitral awards on specific grounds.
The Commission observes that the grounds on which arbitral awards
may be challenged before national courts differ among the Contracting
States and considers that it cannot be required under the Convention
that national courts must ensure that arbitral proceedings have been
in conformity with Article 6 (Art. 6) of the Convention. In some
respects - in particular as regards publicity - it is clear that
arbitral proceedings are often not even intended to be in conformity
with Article 6 (Art. 6), and the arbitration agreement entails a
renunciation of the full application of that Article. The Commission
therefore considers that an arbitral award does not necessarily have
to be quashed because the parties have not enjoyed all the guarantees
of Article 6 (Art. 6), but each Contracting State may in principle
decide itself on which grounds an arbitral award should be quashed.
Under Dutch law an arbitral award may be quashed on, inter alia,
grounds of public order interests. In the present case the applicants
have challenged the arbitral award on these grounds before the Dutch
courts, stating that there were ascertainable facts which showed that
one of the arbitrators gave the appearance of lacking independence and
impartiality.
The Supreme Court, however, decided that an arbitral award could
only be quashed as being contrary to public order interests if either
facts and circumstances had been revealed on the ground of which it had
to be assumed that the arbitrator had in fact not been independent or
impartial, or the doubts as regards his independence or impartiality
were so grave that the disadvantaged party could not be required to
accept the arbitral award. Since the circumstances were not such in the
present case, the Supreme Court rejected the applicant's appeal in
cassation.
In view of this interpretation by the Supreme Court of what could
be considered to be contrary to public order interests, the Commission
observes that the applicant's argument that the mere appearance of a
lack of independence or impartiality should lead to a quashing of the
arbitral award has no basis in Dutch law. It considers that Article 6
para. 1 (Art. 6-1) of the Convention does not require the Dutch courts
to apply a different criterion in determining whether or not to quash
an arbitral award. It finds it reasonable that in this respect Dutch
law requires strong reasons for quashing an already rendered award,
since the quashing will often mean that a long and costly arbitral
procedure will become useless and that considerable work and expense
must be invested in new proceedings.
The Commission furthermore notes that in the proceedings before
the national courts themselves the applicants were provided with ample
opportunity to state their case and to challenge the arguments of the
adverse party.
In these circumstances, the Commission finds no indication of a
violation of Article 6 para. 1 (Art. 6-1) of the Convention.
It follows that the application is manifestly ill-founded within
the meaning of Article 27 para. 2 (Art. 27-2) of the Convention.
For these reasons, the Commission, unanimously,
DECLARES THE APPLICATION INADMISSIBLE.
M.-T. SCHOEPFER G.H. THUNE
Secretary President
to the Second Chamber of the Second Chamber
Full & Egal Universal Law Academy