Africa Sourcing Cameroun Ltd (a company registered in Cameroon) v LMBS Société Par Actions Simplifiée (a company registered in France, trading as “Rockwinds”)
| Jurisdiction | England & Wales |
| Judge | Sir Ross Cranston |
| Judgment Date | 27 January 2023 |
| Neutral Citation | [2023] EWHC 150 (Comm) |
| Docket Number | Claim No.: CL-2022-000163 |
| Court | King's Bench Division (Commercial Court) |
[2023] EWHC 150 (Comm)
Sir Ross Cranston sitting as a High Court Judge
Claim No.: CL-2022-000163
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
COMMERCIAL COURT
AND IN THE MATTER OF AN ARBITRATION
BEFORE TRIBUNALS APPOINTED BY THE FEDERATION OF COCOA
COMMERCE (“FCC”)
Royal Courts of Justice
Strand, London, WC2A 2LL
Yash Kulkarni KC and Max Davidson (instructed by GATELEY LEGAL) for the Claimants
Paul Mitchell KC (instructed by TAYLOR ROSE SOLICITORS) for the First Defendant
Julian Kenny KC (instructed by MILLS & CO) for the Second Defendant
Hearing dates: 17–18 January 2023
This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:30 on Friday 27 th January 2023.
INTRODUCTION
This is an application to set aside an arbitration award under section 68 of the Arbitration Act 1996 on the ground of apparent bias of the chair of the panel of arbitrators. What is called ‘the Award’ in this judgment was made by the Board of Appeal of the Federation of Cocoa Commerce (‘the FCC’), in February 2022. It determined that the claimants were some two years late in applying for arbitration, and that it would not exercise its discretion to extend time. There is also an application to remove the chair of the panel and to have the award remitted for reconsideration by a freshly constituted Board of Appeal.
When the claimants applied to this court in March last year, they made a broader challenge to the Award under both sections 68 and 69 of the Act. However, Foxton J dismissed the section 69 application on the papers stating that the Board of Appeal was entitled to have regard to the factors it did when it exercised its discretion to refuse to extend time. In relation to the application under section 68 Foxton J ordered a hearing, given that there were disputed issues of fact.
Following Foxton J's order, the claimants abandoned that part of their section 68 application contending that the Board of Appeal refused to exercise its discretion to extend time when no reasonable tribunal would have done so. Against the background of Foxton J's warning of the need for a proper basis for making the very serious allegation of actual bias, the claimants also abandoned their section 68 challenge on this ground.
Consequently, the only issue before the court is the section 68 application regarding apparent bias on the part of the chair of the Board of Appeal which made the Award. The claimants submit that circumstances exist which give rise to justifiable doubts as to his impartiality, and that this qualifies as a serious irregularity within section 68(2)(a). In the circumstances, they contend, the substantial injustice required by section 68(2) is to be assumed although, in any event, there is evidence to suggest that the outcome might well have been different if the chair had not been on the Appeal Board. As well as refuting these submissions, it is said by way of defence that as a result of section 73 of the Act the claimants are precluded from advancing these points now because they could have done so earlier.
BACKGROUND
The parties
The claimant companies are traders in cocoa products. The first is registered in Cameroon, the second in Côte D'Ivoire. In this judgment they are described as ‘AS (Cameroon)’ and ‘AS (Côte D'Ivoire)’, or as ‘the claimants’. Neither is a member of the FCC. Mr Loïc Folloroux is the beneficial owner of both companies. His family has political connections in Cote d'Ivoire. Côte d'Ivoire is the largest producer of cocoa beans in the world.
The first defendant, trading as Rockwinds, is also engaged in cocoa trading. It is a member of the FCC. Beans from Côte d'Ivoire used to represent between 60 and 70 percent of Rockwinds' turnover, but as the result of the freezing order imposed by a French court in 2018, described later in the judgment, it has been unable to trade in a significant way since then. Mr Matthew Stolz is the chief executive officer of Rockwinds and, along with his wife, its beneficial owner. He is a member of FCC's council – its governing body – and over the last 15 years has been active in FCC committees and in sitting as an FCC arbitrator. For a time Mr Frederic Coudray was a trader at Rockwinds at its Geneva office. He is also an FCC arbitrator.
Mr Eric Bourgeois is the second defendant. He chaired the Board of Appeal which made the Award, and the challenge of apparent bias in these proceedings is about him. Mr Bourgeois is an experienced cocoa trader, who has worked in the business for over 30 years. At present he is the head of the cocoa department of Walter Matter, a private company based in Geneva which trades in coffee and cocoa. Mr Bourgeois has been a member of FCC's council for over 4 years and since September 2021 has been its treasurer. That means he is one of its three directors, along with the chair and vice-chair. He has been an arbitrator for the FCC (and its French precursor) for over twenty years.
Mr Bourgeois has been made a defendant because the claimants have applied under section 24 of the 1996 Act to have him removed as an arbitrator: CPR62.6(1). He takes no position in relation to the relief the claimants have sought, including his removal, although he attended the hearing to give evidence and to rebut criticism about his behaviour: see T v V [2018] EWHC 1492 (Comm), [10]–[11], per Males J.
It is common ground that Mr Stolz and Mr Bourgeois have known each other for around 15 to 20 years. They know each other from their work with the FCC. They have never sat together on the same committees but have seen each other at meetings of FCC arbitrators, industry social events, workshops, and at FCC council meetings. However, for reasons explained below I accept the evidence that they are not friends and do not know each other well. Mr Bourgeois' evidence, which I accept, is that his relationship with Mr Coudray (whom he had known for some 7 years) is of the same character – they have seen each other at industry and FCC events but are not friends and their relationship is professional.
Mr Stolz and Mr Bourgeois have done one piece of business together, in December 2017, when in the course of his trading for Walter Matter, Mr Bourgeois bought a consignment of cocoa from Mr Stoltz, acting for Rockwinds. It was a trade on the secondary market. It was an exceptional trade for Walter Matter which mainly buys directly from producers, but sometimes a secondary trade is undertaken to plug a gap for a customer. Mr Bourgeois has never traded directly with Mr Coudray.
The FCC
The Federation of Cocoa Commerce is an international trade association with over 200 members from 38 countries. It dates back to 1929 when the Cocoa Association of London was established. In 2002 it merged with the Paris based Association Française du Commerce des Cacaos (AFCC), founded in May 1935, to form the FCC. Like other trade associations in the commodities trade it provides services to its members and arbitration for the settlement of disputes in the trade is a major aspect of this.
FCC arbitrators are on its arbitration and appeal panel and come from its membership. There are some 40 members of the panel. New arbitrators undergo a written and live test, and all arbitrators on the panel must undertake continuing training. The FCC's Arbitration and Appeal rules provide for a first-tier decision and then, if required, an appeal to a Board of Appeal. The rules disqualify arbitrators from sitting if circumstances exist that give rise to justifiable doubts as to their impartiality or if they are ‘aware of any circumstances which may affect their impartiality’.
The FCC is managed by its council of 18 voting members. It has representatives from among traders, those engaged in the industry (business to consumer; business to business), and those involved in production or export. The FCC has five committees, arbitration and appeal, membership, education, contracts, and superintending and warehousing.
Evidence
Mr Folloroux, Mr Stolz, and Mr Bourgeois attended the hearing to give oral evidence. I found Mr Folloroux's evidence difficult. He was intent on getting across his case on the merits of the underlying dispute and the unfairness of the arbitration. He did not seem to hear some of the questions and spoke over counsel. By contrast Mr Stolz and Mr Bourgeois gave evidence calmly and accepted that in some respects they could not remember or did not know. Mr Kadoko Bamba also gave evidence for the claimants. He is the foreign marketing manager of the Conseil du Café Cacao of the Côte d'Ivoire. He is also a member of the FCC council. He gave evidence before me with the assistance of a French interpreter. I accept the submission that compared to the other three witnesses he was the closest to an independent witness. I return to his evidence later in the judgment.
The dispute and the contracts
The substance of the dispute between the claimants and Rockwinds over transactions in cocoa futures is not a matter dealt with in the Award. Nor is it a matter before the court. Suffice to say that Rockwinds agreed to act as a broker for the claimants' cocoa futures dealings by email exchanges dating between February 2017 and March 2018. For this purpose, Mr Folloroux advanced moneys to Rockwinds, which on his account he had loaned to the claimants.
The upshot of the dealings is disputed. Mr...
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