Without showing prejudice, a global pandemic is not a sufficient reason to delay a hearing (and res judicata, revisited)

Case information
June 15, 2021
Interest to foreign readers: 
Violation of due process (right to be heard)
Principle of res judicata
Original language: 


Introductory note: 

A dispute arose within a corporate group governed by a Subscription and Shareholders’ Deed, subject to English law, after the CEO was unilaterally fired and A.________, a member of the family controlling the majority shareholder, installed himself in the position. While the shareholders’ agreement contained an arbitration clause, recourse was first made to the High Court of Justice (of England and Wales), primarily to secure an injunction to compel A.________ to cease and desist, initiated by company directors of the group’s holding company. What would follow was a complex series of decisions by the High Court of Justice and an Arbitral Tribunal, constituted under the auspices of the LCIA, culminating in an arbitral Award in the Claimant’s favor, issued in a highly unusual format by the Arbitral Tribunal (a format referred to by the Federal Tribunal as “minimalist”, utilizing a “nesting dolls” technique of references back to previous judgments, which “does not make the dispute easier to understand.”).


The Respondents appealed to the Federal Tribunal, citing a violation of public policy and their right to be heard. The Federal Tribunal rejected their arguments, and the following points are of interest in the decision:


·       The Appellants argued that the denial of their request for the hearing to be moved on account of the “exceptional circumstances” of the Covid-19 pandemic violated their right to be heard. However, the Federal Tribunal found that this was a mere pretext to delay the proceedings. The Court noted that, rather paradoxically given their argument, the Appellants had also demanded the rescheduled hearing be in-person rather than via video conference. The Federal Tribunal called the credibility of this argument “irremediably compromised” when all of the factors were considered; the Court did, however, note that the Appellants’ argument that a pandemic can make it more difficult to gather facts and evidence might have been successful to show the Arbitral Tribunal had disregarded its right to be heard – if the Appellants had been able to provide specific examples and precisely described any difficulties they had actually faced and had raised such issues before the conclusion of the arbitral proceedings. (See Section 5.5. in this respect.)


·       Before the Federal Tribunal, the Appellants argued a violation of procedural public policy and their right to be heard by the Arbitral Tribunal’s “misapplication” of res judicata and reliance on decisions of the High Court of Justice. The Arbitral Tribunal had noted that the vast majority of the contractual breaches alleged by the Claimant had been established by the High Court of Justice after a very thorough evidentiary process, and found itself bound by those findings in fact and law. The Federal Tribunal conceded that the Appellants were right that the Arbitral Tribunal did not explicitly examine the conditions for recognition, an analysis required by Swiss case law. However, the Arbitral Tribunal had, in fact, given several reasons why it chose to incorporate the findings of the High Court of Justice in its Award. Furthermore, the Appellants themselves had demonstrated reliance on some of the earlier decisions of the High Court of Justice. In making its decision, the Federal Tribunal also recalled that even an arbitrary assessment of the evidence is not in and of itself contrary to public policy and found the Arbitral Tribunal had not breached public policy in citing and relying on, without discussion, the findings of the High Court of Justice. (See Section 6.6 in this respect.)


·       Finally – a quick procedural note – it must be recalled that in order to receive a judgment in one’s favor from the Federal Tribunal (or at least, to increase the chances of such) for a violation of the right to be heard, a party must show, in detail, the arguments it claims to have been ignored or misconstrued by the arbitral tribunal. The Federal Tribunal was compelled to reject part of the Appellants’ case in this regard as they had not indicated “which relevant argument was raised in this respect and neglected or disregarded by the Arbitrators.” (See, for example, Section 6.7.2 in this respect.)



Charles PONCET and Luisa MOCKLER