Lexploria

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

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NORDSTRÖM-JANZON AND NORDSTRÖM-LEHTINEN v. THE NETHERLANDS

NORDSTRÖM-JANZON AND NORDSTRÖM-LEHTINEN v. THE NETHERLANDS

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