“The law by which our case must be decided is not difficult to find, seeing that it is the same among all nations; and it is easy to understand, seeing that it is innate in every individual and implanted in his mind”
Hugo Grotius, Mare Liberum, 1609[1]
1/ The Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “NYC”) envisages an international regime of delocalised justice.[2] This relies on a pro-enforcement bias in the legal systems of contracting states, which is encouraged by the articles of the NYC; there is, however, a counterweight contained therein at the intersection of the international with the domestic. This is the public policy exception.
2/ The purpose of this essay is to examine the public policy exception as applied in the English and French courts to contracts tainted by bribery when enforcing arbitral awards.
3/ The principle claim of this essay is that the Paris Court of Appeal has shown an increasingly ‘maximalist’ approach to recognition and enforcement, characterised by an extended control of arbitral tribunals’ awards, which has not been mirrored by the courts on this side of the Channel.
Part 1: The Public Policy Exception in England and France
4/ Grotius’s appeal, set out above, was to a supranational, innate sense of justice. It was, he said, addressed to the twin tribunals of Conscience and Public Opinion, and was premised on the belief that morality, as conceived as natural law, was the common denominator in different legal systems.[3]
5/ Over four hundred years later, there are echoes of Grotius’s reasoning in the concept of public policy: in England and in France, there is a moral dimension to that concept.[4] As an example of the intermingling of morality, contracts and public policy, Lord Halsbury L.C stated in Re Missouri Steamship Co [1889] 42 Ch.D. 321:
“Where a contract is void on the ground of immorality, or is contrary to such positive law as would prohibit the making of such a contract at all, then the contract would be void all over the world, and no civilised country would be called on to enforce it“[5]
6/ That approach is adopted in express terms by courts when applied to the recognition, or setting aside, of arbitral awards linked to contracts tainted by bribery; the moral censure of the courts is deployed as part of the wider struggle to stamp out corruption and maintain the integrity of domestic legal orders.
7/ Although universal norms may be the kernel of the public policy exception in both jurisdictions, the exception is expressed differently in applicable domestic legislation.
8/ Reproducing the terms of Article V(2)(b) of the NYC, S 103(3) of the Arbitration Act 1996 (“the AA”) sets out that recognition or enforcement of an award under the NYC may be refused:
“if it would be contrary to public policy to recognise or enforce the award”
9/ Although neither the NYC, nor the AA provide a definition of ‘public policy’, the English Courts have consistently applied the concept narrowly.[6]
10/ In France, review of an international arbitral award is governed by Article 1520 of 5th Edition of the French Civil Procedure Code (“CPC”). This has typically been understood to provide a ‘minimalistic’ approach to the domestic courts’ supervision of arbitral awards:[7] French jurisprudence attributes central importance to the will of the parties, rather than any national law.[8] Article 1520 provides 5 grounds according to which an award may not be enforced, one of which specifies that an award may not be enforced where:
“recognition and enforcement of the award is contrary to international public policy.”[9]
11/ The exception is, therefore, cast in different terms to that in the AA, encompassing a broader range of grounds for non-enforcement than its English counterpart, and has been developed in the Paris courts to be a concept expressed as “the French conception of international public policy”.[10]
12/ One strand of this conception embraces the fundamental principles of universal, international justice.[11] This was elaborated in the Cour de Cassation’s Decision in Latour[12] as “principals of universal justice which French public opinion considers as having absolute international value”.[13] As outlined in the following section, it is that conception of the public policy exception which has been relied on by the French Courts in non-recognition decisions.
13/ It is, similarly, clear that the English courts will have regard to international public policy, albeit in more limited circumstances, when enforcing an arbitral award. In the Judgment of Hamblen LJ in RBRG Trading (UK) Ltd v Sinocore International Co. Ltd [2018] EWCA Civ 838 the Court of Appeal set out that when enforcing an arbitral award, where there is no illegality under the applicable foreign law, but there would be illegality under English law, public policy will only be engaged where the illegality reflects considerations of international public policy rather than purely domestic public policy.[14]
14/ We see, then, that the authorities regarding enforcement of arbitral awards in England and France show that an assessment of international public policy may form part of the Court’s review of an arbitral award; recent cases, however, have revealed a difference in the way in which the concept is invoked in respect of arbitral awards tainted by bribery.
Part 2: Bribery and Public Order in France and the UK
15/ One of the attractions of both Paris and London as seats of arbitration is their perceived record on enforcing arbitration awards.[15] However, addressing allegations of bribery in arbitral awards has been an inevitable corollary of the international appeal of the two jurisdictions. Their differing approach to the subject, as it applies to arbitral awards, is set out in this section, by first addressing recent French jurisprudence, before then comparing this with the approach in England.
A – The Position in France – The Court and International Public Policy
16/ In a number of recent decisions, the Paris Court of Appeal (“PCoA”) has developed the French conception of international public policy. This process has contributed to the increasingly ‘maximalist’ approach to enforcement.[16] This is informed by the perceived juridical responsibility for the arbitral awards being enforced, which is perhaps best encapsulated by Professor Emmanuel Gaillard, as follows:
“Between a State that simply hosts arbitral proceedings in its hotels or its conference centers and a State that authorizes the seizure and forced sale of assets on its territory, the latter manifestly has the strongest title to determine what it regards to be an arbitral award worthy of legal protection and, retrospectively, what it considers to be a valid arbitration agreement.“[17]
17/ This conception also underlines the primacy of an enforcing state’s legal integrity, which has been further deployed in the PCoA recent decision of 28 May 2019 in Alstom v Alexander Brothers. In this case, the PCoA refused to enforce an arbitral award against Société Alstom Network UK ltd (“Alstom”)[18]. The award, rendered in Switzerland, and at first granted exequatur in France, was made for sums due to Alexander Brothers Ltd (“AB”), a company based in Hong Kong, by Alstom, pursuant to three contracts entered into by the parties.
18/ The contracts were, on the face of the documents, agency agreements, whereby Alstom was to pay AB to lobby for and procure engineering contracts on Alstom’s behalf:
a) The first two contracts engaged AB to obtain contracts for Alstom in respect of a tendering process conducted by the Ministry of Transport of the PRC for the provision of heavy-weight electrical locomotives.
b) The third was for a contract for a tendering process conducted by a public enterprise, for the supply of rolling stock to be used in the extension of the Shanghai Metro system.
19/ In refusing to enforce the award, the PCoA appeared to accept the following argument, advanced by Alstom:
“The Judge considering the enforcement of the award is not merely adjudicating as to the rights and wrongs of the terms of the contract, but the insertion of the decision into the national jurisprudential order. His control is not limited to seeing whether the stipulated terms of the contract – understood as the rules of compliance – have been complied with, but rather to ensure that his decision does not result in the recognition of an award that violates public international norms in a concrete, manifest and effective way.”[19]
20/ An argument which was further developed as follows:
“The French jurisprudential order will not tolerate a violation of the prohibition of the corruption of foreign public officials, even in the international context.”[20]
21/ The reasoning is rooted in the idea of maintaining the integrity of domestic judicial order; the prevailing argument was that it would be compromised by recognising practices which offend public international norms. This submission appears to have been accepted by the Court, which ultimately found that:
“It is, in conclusion, necessary to find that the recognition or enforcement of the award that requires Alstom to pay sums aimed at the financing or the payment for corrupt activities is against public international public policy”[21]
22/ The principle according to which the Court refused to recognise the award in Alstom is broad and imperfectly defined, and is, as such, consistent with recent cases of the appellate courts in France.
23/ The PCoA, in another recent decision, Maison Bauche v. Indagro, reviewed the decision of the court of first instance to enforce an arbitrator’s award made in London for the sum of $1,000,000 to be paid to Indagro.[22] The underlying contract was for the sale of fertiliser from Russia to Togo and Benin. Maison Bauche (“MB”) sought to annul the award on the basis that the contract had been procured by a corrupt practice, whereby one of its employees had been bribed to hike the prices paid for the fertiliser.
24/ The PCoA acceded to MB’s submissions, finding that it could not enforce the award, as:
“The recognition of the award would allow Indagro to reap the benefits of the corrupt agreement.”[23]
25/ Although elements of the decision were ultimately overturned by Cour de Cassation, this key element of the PCoA’s reasoning was not annulled.[24] Accordingly, for reasons of international public policy, the position in France is that an award will not be enforced if the underlying contract was procured by bribery.
B – The Position in the England
26/ In Soleimany v. Soleimany [1999] QB 785, Waller LJ, giving Judgment in respect of an arbitral award that enforced an illegal contract, recognised:
“[a] tension between the public interest that the awards of arbitrators should be respected, so that there be an end to lawsuits, and the public interest that illegal contracts should not be enforced”
27/ This essay maintains that this tension has been resolved by the English Courts in a way that differs from the approach in France.
28/ In his dissenting decision in Westacre Investments Inc v Jugoimport SDPR Holding Co Ltd [2000] Q.B. 288, Waller LJ set out what he referred to as The Lemanda Principle. This was taken from the decision of Phillips J in Lemenda Trading Co. Ltd v African Middle East Petroleum Co. Ltd [1988] 1 Q.B. 448. That case involved a contract under which an intermediary was obliged to use personal influence to obtain a contract in Qatar. In passages which were endorsed unanimously by the Court of Appeal,[25] Waller LJ clarified the effect of Lemenda:
“What in my view Lemenda decided was (1) there are some rules of public policy which if infringed will lead to non-enforcement by the English court whatever their proper law and wherever their place of performance but others are based on considerations which are purely domestic; (2) contracts for the purchase of influence are not of the former category; thus (3) contracts for the purchase of personal influence if to be performed in England would not be enforced as contrary to English domestic public policy; and (4) where such a contract is to be performed abroad, it is only if performance would be contrary to the domestic public policy of that country also that the English court would not enforce it.”
29/ The Lemenda Principle, as refined by Waller LJ recognised a category of rules, which, if infringed by an award will not be enforced “wherever their place of performance”. But this category was also narrowly defined. The principle in Lemenda, as distilled by Waller LJ, therefore left open the possibility of enforcing an award where the underlying contract was not contrary to the public policy of the state in which the contract was to be performed – albeit that the same contract would be otherwise unenforceable in England.[26]
30/ Applying this current of reasoning, in Honeywell International Middle East Ltd v Meydan Group LLC [2014] EWHC 1344 (TCC), Ramsey J, in what is the leading authority on this point, established that an international award, underpinned by a contract procured by bribery, may still be enforceable in England.
31/ In that case, the parties entered into a contract pursuant to which Honeywell Middle East Ltd’s (“Honeywell”) undertook works on a Dubai racecourse. Following the failure of Meydan Group LLC (“Meydan”) to make payment, Honeywell issued arbitral proceedings. Despite Meydan’s refusal to participate in proceedings, the tribunal went on to make an award in Honeywell’s favour under the rules of the DIAC.[27]
32/ Honeywell’s application to enforce the award was resisted by Meydan on the basis that recognition contravened English public policy, alleging that the contract giving rise to the award had been procured by bribery.[28]
33/ After reviewing the English authorities relevant to the public policy exception, Ramsey J found that Meydan’s application to set aside the award had no real prospect of success:
“It follows that whilst bribery is clearly contrary to English public policy and contracts to bribe are unenforceable, as a matter of English public policy, contracts which have been procured by bribes are not unenforceable.”
34/ Although permission to appeal was granted on this point, the case did not reach the Court of Appeal for review.[29] Accordingly, the Judgment of Ramsey J represents the position in English law, as upheld in National Iranian Petroleum Company v Crescent Petroleum Company International [2016], and the approach taken in Honeywell has been celebrated since, as a leading example of a narrow interpretation of S103(3) of the AA, allowing for a minimal intervention in the arbitral regime.[30]
Part 3: Questions of Procedure and Evidence
35/ The French Courts have shown a willingness to investigate the underlying allegations of bribery when enforcing an award; in this they also differ from their English homologues.
36/ In an interlocutory judgment in Alstom v Alexander Brothers, the PCoA compelled Alstom to produce specified pieces of evidence for the Court’s consideration.[31] The PCoA then based its final decision on the sum of ‘indicative evidence’ (“La réunion d’un faisceau d’indices”). This review encompassed AA’s human resources, its assets and the proportionality of the payment for the work undertaken.[32] Importantly, it was not a precondition to Alstom’s case that the allegations of bribery had not been raised before the arbitrators.
37/ The approach taken by the PCoA is consistent with that in Indagro, in which the Court carried out a full review of the underlying dispute and allegations. In this respect, the Court stated its task in the following way (emphasis added):
“When it is claimed that the recognition of an overseas arbitral award giving effect to a contract obtained by corruption, it falls to the court, on the application for exequatur, and giving effect to the Civil Code, to give judgment on the alleged wrongdoing to see whether recognition of the award would violate the French conception of international public policy in a manifest, effective and concrete way. The Court is not limited in its examination by either the findings of the arbitral tribunal, nor by the choice of law governing the underlying agreement.”[33] (emphasis added)
38/ This willingness to examine the underlying evidence underpinning the arbitral award flows naturally from the supervisory function the French courts intend to play.[34]
39/ The English courts, on the other hand, are slow to reopen the facts of an arbitration in enforcement proceedings. In Honeywell, Ramsey J, in addition to his ruling set out above, at paragraph 34, decided that:
a) If an allegation relating to bribery is to be raised as a ground for the setting aside of an arbitral award; and
b) that allegation, or evidence, could have been put before the arbitrators; then
c) it must have been raised to be relied on before Court.[35]
40/ This conclusion follows the majority decision in Westacre, in which the Court upheld the reasoning of Colman J. That Judgment established that the public policy of sustaining international arbitration awards outweighed the public policy in discouraging international commercial corruption. The approach of the English courts does not, therefore, mirror the approach taken in France.
Part 4: Conclusion
41/ Grotius’s conception of the universal norms is perhaps best expressed in the modern context of international arbitration as the notion of transnational public policy: the public policy not of any given state, but one that transcends national boundaries.[36]
42/ This idea has been increasingly encapsulated by ‘the French conception of International Public Policy’, which has been expressly drawn upon by the French courts when refusing to recognise, or enforce, arbitral awards related to contracts procured by bribery. It has also informed the PCoA’s willingness to scrutinise arbitral awards.
43/ It seems, however, that were Grotius to have offered the same interpretation of the public policy exception before an English tribunal, his appeal would have fallen on deaf ears.
44/ The courts in England are unwilling to deploy the same approach to the public policy exception, as adopted in France. This results in a more restrained, or minimalist, approach to enforcement, whereby an award, where the underlying contract was procured by a bribe, may be enforced, and the court will be unlikely to re-open the facts of the arbitration.
This essay was first submitted as an entry in the inaugural Jane Lemon QC Essay Competition in 2020.
[1] Grotius, H,. Mare Liberum, Trans. Alex Streicher, 2011.
[2] Read, P,. ‘Delocalization of International Commercial Arbitration: its relevance in the new millennium’, American Review of International Arbitration, 1999, vol. 10 no. 2 commenting in respect of Art.V(1)(a) and (e).
[3] See for example “It was proper to add many, because scarce any right can be found common to all nations, except the law of nature, which itself too is generally called the law of nations”, Grotius, H,. The Rights of War and Peace, Including the Law of Nature and of Nations (Cosimo Classics) 2007, p25.
[4] See, for example, Phillips J in Lemenda Trading Co. Ltd v African Middle East Petroleum Co. Ltd [1988] 1 Q.B. 448 at p 459.
[5] In re Missouri Steamship Co. (1889) 42 Ch.D. 321, 336.
[6] RBRG Trading (UK) Ltd v Sinocore International Co. Ltd [2018] EWCA Civ 838 at [25].
[7] Margaret L. Moses, ‘The Principles and Practice of International Commercial Arbitration’, (Cambridge), 2007 noting the public policy exception in France under Article V of the NYC, at p242.
[8] As set out in the Cour de Cassation’s Judgment in Comité populaire de la municipalité de Khoms El Mergheb v Dalico Contractors (1994) 121 J.D.I. 432, as cited and discussed in Bansal, S, ‘The efficacy of French law on international arbitration: an analysis in the light of art.V(1)(a) and (e) of the New York Convention, 20 (6) International Arbitration Law Review, 2017 at p 206.
[9] Similarly, Paragraph 1 of Article 1498 of the CPC states that ‘recognition’ of awards made abroad or in international arbitration in France is contingent on them not being “manifestly contract to international public policy.”
[10] “La conception francaise de l’ordre public international”
[11] Delvolvé, J-L; Rouche, J;.French, G, ‘Arbitration Law and Practice: A Dynamic Civil Law Approach to International Arbitration, (Kluwer), 2009. p154.
[12] Though that Decision dealt with a conflict of law point, and the non-applicability of foreign law on public policy grounds, as set out in the next section.
[13] “l’ordre public interne français n’ayant à intervenir qu’au regard du fait des choses utilisées en France au moment de l’accident, sous la seule réserve de principes de justice universelle considérés dans l’opinion française comme doués de valeur internationale absolue, principes non mis en cause dans l’espèce” N.B: All translations are the author’s; the original French text is set out for reference.
[14] RBRG Trading at [25].
[15] White & Case LLP and Queen Mary, University of London, ‘2018 International Arbitration Survey: The Evolution of International Arbitration’, (2018) at p11.
[16] Glucksmann, E, Revue de droit international d’Assas, (2018) p 596.
[17]Gaillard,E,. ‘Legal Theory of International Arbitration’ (Martin Nijhoff, 2010), p.32. cited in Bansal, S,. ‘The efficacy of French law on international arbitration: an analysis in the light of art.V(1)(a) and (e) of the New York Convention’, 20 (6) International Arbitration Law Review, 2017 at p 206.
[18] Alstom 28 MAI 2019 – 16/11182.
[19] “Le juge de l’exequatur n’est pas juge du contrat mais de l’insertion de la sentence dans l’ordre juridique national. Son contrôle n’a donc pas pour objet de vérifier que des stipulations contractuelles – y compris les règles de conformité (“compliance”) – ont été correctement exécutées, mais seulement de s’assurer qu’il ne résulte pas de la reconnaissance ou de l’exécution de la sentence une violation manifeste, effective et concrète de l’ordre public international et, en l’espèce, que la sentence ne prononce pas une condamnation à payer des sommes destinées au financement ou à la rémunération d’une activité de corruption ou de trafic d’influence“, Alstom 28 MAI 2019 – 16/11182 p6. Indeed, the PCoA had set out this reasoning in its interlocutory judgment of Alstom ARRET DU 10 AVRIL 2018 at p8.
[20] “La prohibition de la corruption d’agents publics étrangers est au nombre des principes dont l’ordre juridique français ne saurait souffrir la violation même dans un contexte international. Elle relève par conséquent de l’ordre public international” Alstom 28 MAI 2019 – 16/11182 p6.
[21] “Il convient, par conséquent, de juger que la reconnaissance ou l’exécution de la sentence qui condamne Alstom à payer des sommes destinées à financer ou à rémunérer des activités de corruption est contraire à l’ordre public international” Alstom 28 MAI 2019 – 16/11182 p22.
[22] CA PARIS, 27 SEPTEMBER 2016, N°15/12614.
[23] “la reconnaissance de la sentence permettrait à [la société Indagro] de retirer les bénéfices du pacte corruptif” CA Paris, 27 September 2016, n°15/12614, p4.
[24] The Cour de Cassation overturned the decision of the Cour d’appel on the ground that it had not identified the incidence of the corruption with the contract itself, there being insufficient evidence that the individual transaction was linked with the alleged wrongdoing
[25] The Court was divided on the separate point of whether the facts of the arbitration could be re-opened, as set out below.
[26] On this point the Lemenda Principle accords with the decision of the Court of Appeal in RBRG Trading, as set out at paragraph 13, above.
[27] The Dubai International Arbitration Centre.
[28] Honeywell at [175] – [177].
[29] Honeywell International Middle East Ltd v Meydan Group LLC (formerly Meydan LLC) 2014] EWCA Civ 1800.
[30] ‘The Enforcement of Foreign Arbitral Awards’ at the CIArb London branch annual general meeting, keynote address, April 27, 2015, Lord Justice Tomlinson at p400.
[31] Alstom, ARRÊT DU 10 AVRIL 2018.
[32] Alstom 28 Mai 2019 – 16/11182.
[33] as cited in Callé,P; Dargent, L,. Code de procédure civile 2020, annoté – 111th Edition,. (2020): “Lorsqu’il est prétendu qu’une sentence rendue a l’étranger donne effet a un contrat obtenu par corruption, il appartient a la cour , saisie sur le fondement des disposition précitées du code de procédure civil, de l’appel de l’ordonnance d’exequatur, de prononcer sur l’illicite alléguée de la conventionne d’apprécier si la reconnaissance ou l’exécution de la sentence viole de manière manifeste, effective et concrète la conception française de l’ordre public international. Elle n’est liée dans ce examen ni par les appréciation portées par le tribunal arbitral, ni par la loi de fond choisie par les parties.”
[34] Duclercq, C; Aronowicz, A,. ‘When French judges confirm the expansion of their control over arbitration Awards’ Young Arbitration Review, 2018.
[35] Westacre Investments at [309].
[36] Moses, M,. ‘Public Policy Under the New York Convention: National, International and Transnational’ (2019), in 60 Years of the New York Convention: Key Issues and Future Challenges, Fach Gómez K, Lopez Rodriguez AM (eds), Wolters Kluwer (2019).
