In Chantiers de l’Atlantique SA v Gaztransport et Technigaz SAS , the Commercial Court considered a challenge to an award on the ground that the award was obtained by fraud, under section 68(2)(g) of the Arbitration Act 1996.
In Double K Oil Products v Neste Oil  the Court had summarised the applicable legal principles on a section 68 application as follows:
- It is not enough to show that one party inadvertently misled the other, however carelessly (Cuflet Chartering v Carousel Shipping Co Ltd ).
- It will normally be necessary to satisfy the court that some form of reprehensible or unconscionable conduct has contributed in a substantial way to the obtaining of the award. Therefore, a challenge to an award cannot be made on grounds of:
- an innocent failure to give proper disclosure (Profilati Italia SRL v PaineWebber Inc and another ); or
- the innocent production of false evidence (Elektrim SA v Vivendi Universal ).
- The applicant must show that the new evidence relied on to demonstrate the fraud was unavailable at the time of the arbitration and would have had an important influence on the result (Westacre Investments Inc v Jugoimport-SDPR Holding Co Ltd ).
The Court noted that the arbitration was conducted by French parties, represented by French lawyers, in accordance with civil law arbitration procedure. In particular, the rules for disclosure of documents were based on the IBA Rules (not the 2010 Rules imparting the duty of good faith). As such, there was no duty to disclose relevant documents as there might be under English procedure. Therefore, the court must be careful not to import English law concepts of the duty of disclosure into its assessment of the parties’ conduct and the serious allegations of concealment.
The Court rejected allegations of fraud in the disclosure exercise. However, it found that a particular witness had deliberately and dishonestly concealed certain tests and results from the tribunal. This went beyond a witness for one of the parties to an arbitration lying to the tribunal and committing perjury (the scenario that The Court in Elektrim considered would be insufficient to establish that the award was obtained by fraud). Rather, this was serious deception of the tribunal by a person who had been deputed to present a party’s technical case to the tribunal. As such, it was a fraud by the party to the arbitration for the purposes of section 68(2)(g) of the AA 1996.
However, the judge concluded that the innocent party could not show that disclosure of the true position to the tribunal would have had an important influence on or would probably have affected the result of the arbitration. This was because the tribunal had decided that, even if it had accepted the argument that there was a design fault, the fraudster was not liable under French law. Consequently, the innocent party could not show that the award was obtained by fraud or that it had suffered a substantial injustice.
The decision is striking because the judge made an unequivocal finding of fraud by a principal witness in the arbitration, that amounted to a fraud by a party to the arbitration, but nevertheless rejected the challenge to the award. As such, it highlights the strict statutory test for challenges under section 68 of the AA 1996, and the need for a causative link between the fraud and the obtaining of the award.