Elektrim SA v Vivendi Universal SA & Ors Rev 1

Section 68 of the Arbitration Act 1996 provides a narrowly confined jurisdiction to intervene in arbitral awards. An award is obtained by fraud where a party, or someone acting with its knowledge, deliberately conceals a relevant document with the intention of misleading the tribunal and the concealment causally contributes to the award. Negligence, mistake or an erroneous interpretation of a disclosure order is insufficient. The applicant must also establish substantial injustice. The statutory duties imposed by section 40 are not implied contractual terms of the arbitration agreement. Their breach attracts the statutory remedies under the Act and does not, without more, give rise to repudiation or renunciation of the arbitration agreement.

Elektrim applied under sections 68(2)(g) and 80(5) of the Arbitration Act 1996 to challenge a partial LCIA award dated 22 May 2006 and to extend the 28-day time limit. It alleged that Vivendi had deliberately concealed the Gibert Memorandum, a document concerning Vivendi’s intentions regarding Telco and Ymer, and that the award had thereby been obtained by fraud or procured contrary to public policy.

Elektrim also sought declarations and an injunction on the basis that Vivendi’s alleged failures to comply with disclosure obligations breached section 40 of the Act, repudiating or renouncing the arbitration agreement. The central issues were whether the statutory threshold for intervention was met and whether section 40 duties operated as implied contractual terms.

1. Extension of time. The application was issued after the 28-day period, but Elektrim and its new English lawyers had acted reasonably and without undue delay after receiving the memorandum. The merits were sufficient to justify an extension under section 80(5) and CPR Pt 62.9.
2. Fraud and public policy. Section 68 has a high threshold and the court’s role in supervising arbitration is deliberately limited. The phrase “obtained by fraud” concerns fraud by a party to the arbitration, or fraud by another person to which that party was privy. In the disclosure context, deliberate concealment of a relevant document, with knowledge of its existence and an intention to mislead the tribunal and the other party, may qualify. The applicant must also prove a causative link between the concealment and the favourable award. Negligence, an error of judgment or an erroneous interpretation of a production order is insufficient. The public-policy limb adds nothing in this context beyond deliberate and reprehensible concealment.
3. There was no sufficiently proved deliberate concealment by Vivendi, its employees or its lawyers. The disclosure exercise was extensive, and the interpretation of the tribunal’s order, although possibly wrong, was not perverse or shown to have been made in bad faith.
4. In any event, the memorandum would not have altered the majority tribunal’s material findings. The tribunal had already considered likely Vivendi control of Ymer, Vivendi’s intentions and Elektrim’s financial motivation. The necessary causal link and substantial injustice were therefore absent. The section 68 application was dismissed.
5. Section 40 duties. The duties imposed by section 40 are mandatory statutory duties, not implied terms of the arbitration agreement. Sections 41 and 42 provide the relevant statutory mechanisms and Part One supplies a comprehensive scheme for dealing with non-compliance. Treating section 40 as an implied term would be inconsistent with that scheme and with section 1(c). The alleged conduct therefore could not amount to contractual repudiation or renunciation. Both applications were dismissed.

First-instance applications in the High Court Commercial Court. The judgment does not state any prior appellate decision.