Within the framework of a building restructuring project, Royal Annecy entrusted the realization of one part to Elitec.
The two companies entered into an agreement stating that any future disputes would be submitted to the mediation of Mr. Y. In case of disagreement over the mediation, the parties were supposed to constitute an arbitral tribunal, chaired by Mr. Y.
Following a dispute, the clause was enforced and Mr. Y. rendered five awards. The awards were quashed on the ground that no arbitration clause had been signed.
Royal Annecy brought a liability action for fault against Mr. Y. and a representative of the opposing party. It pretended, inter alia, that Mr. Y misused its arbitrator’s power, that it could not have accepted, in order to allocate to the opposing party an overwhelming sum of money.
The court of appeal upheld the judgment ordering Mr. Y. to pay various sums and rejected Mr. Y.’s claims as for the payment of his arbitrator’s fees.
It also found that Mr. Y. could not be unaware that it was impossible for him to render new awards after the annulment of his decisions based on an inexistent arbitration clause. His behavior forced Royal Annecy to initiate various procedures using legal services and causing time and money losses.
Mr. Y. appeals by arguing that the arbitrator’s personal liability can only be incurred for deceit, fraud or gross negligence. In this case, these omissions were allegedly not found. He also claims that annulled awards, because they are unenforceable, do not result in losses. Thus, neither the fault nor the link has been established.
The Cour de Cassation dismisses the appeal. It finds that the conclusions of the court of appeal are sufficient to establish the fault and the causal link between that fault and prejudice. It, therefore, deduced correctly that the liability of the arbitrator was incurred on the basis of the Civil Code.