Limited powers of Belgian courts to handle requests for the annulment of rulings by arbitration panels on competition law issues

On 22 June 2009, the Brussels Court of Appeal ruled that it was competent to review a decision by an arbitration panel, if it threatened public order and therefore could decide whether or not the arbitration panel’s decision was contrary to Articles 81 and 82 of the EC Treaty. However, the Court held that it could not annul or review a decision by an arbitration panel that was only concerned with an award of damages between parties to an agreement nullified because it infringed EU competition law.
 
In 1991, Cytec, a Dutch manufacturer of monomere acrylamide (AMID), and SNF, a French manufacturer of polacryamide (PMD) signed a supply agreement which obliged SNF to purchase a minimum quantity of AMID from Cytec.
 
In 1993, Cytec and SNF signed a new agreement, under which SNF was obliged to purchase all of the AMID required by its factory in Sainte-Etienne if this was more than 17,000 tonnes. The agreement was concluded for 8 years and was governed by French law. It contained an arbitration clause which stated that any disputes would be settled by ICC arbitration in Brussels.
 
In January 2000, SNF informed Cytec that, in its opinion, the 1993 agreement was in breach of Articles 81 and 82 of the EC Treaty and requested its immediate termination. A few months later, arbitration proceedings were initiated.
 
The arbitration proceedings were divided into two phases. In the first phase, the arbitration panel would rule on the dispute between the parties, but would not make any ruling as to whether damages were payable or not, and the amount of damages payable, which would be covered in the second phase of the proceedings and would be the subject of a second ruling by the arbitration panel.
 
The first ruling held that the 1993 agreement was in breach of Article 81(1) of the EC Treaty, as it aimed to prevent SNF from entering the market for AMID, and therefore the 1993 agreement was declared null and void ab initio.
 
In the second ruling, the arbitration panel ordered SNF to pay Cytec over 10 million euros in  damages for (i) the fact that Cytec had been unable to execute the 1991 agreement  under which the purchase volumes exceeded those of the 1993 agreement until 1995, (ii) the loss of the opportunity for Cytec to sell AMID to SNF between 1995 and 2000 at an average European price and (iii) interest on the other amounts.  The arbitration panel determined the amount of the damages based on the situation in which the parties would have found themselves had the 1993 agreement not been signed..
 
On 19 May 1995, SNF filed a request with the Brussels Court of First Instance, to have the arbitration panel’s rulings declared null and void. The Court of First Instance declared the request admissible and well-founded and annulled the arbitration panel’s rulings. Cytec appealed against this judgment to the Brussels Court of Appeal.
 
Under Belgian law, decisions by arbitration panels can only be annulled by the courts for the reasons explicitly listed in the Judicial Code, which include “if the arbitration panel’s ruling threatens public order”.
 
In its appeal decision, the Court of Appeal stressed that it was not its responsibility to decide whether the arguments used by the arbitration panel to justify its decision were pertinent or not, nor was it the Court’s responsibility to replace the arbitration panel’s opinion by its own. It was also not up to the Court to review or annul an allegedly  “bad ruling”: it could only annul a ruling which threatened public order.
 
The Court of Appeal added that this case had raised the question of whether the arbitration panel’s decision threatened public order or not, and that it was not disputed that Articles 81 and 82 of the EC Treaty covered public order.
 
However, the Court of Appeal stated that, by annulling the 1993 agreement, the arbitration panel had eliminated the only anti-competitive part of the agreement (i.e.the period of 8 years) and had allowed SNF to enter the AMID market. The arbitration panel’s ruling thus complied with Article 81 of the EC Treaty and no evidence had been submitted that Article 82 of the EC Treaty had been infringed.
 
Acknowledging the above-mentioned principle of limited competence with regard to decisions made by arbitration panels, the Court of Appeal stated that it was not competent to  rule on any other aspects of the case, including the award of damages.
 
SNF also filed a complaint before the French courts, based on French competition law, but the complaint was rejected by the court. Also SNF’s complaint to the European Commission was unsuccesfull..
 
The final irony is that SNF, the party that originally asked for the agreement to be annulled because it breached competition law, remains obliged to pay over 10 million euros in damages to Cytec because the agreement was anti-competitive. This amount allegedly exceeds the amount it would have had to pay under the agreement had the agreement run for its full term.  It is unknown yet whether an appeal will be lodged before the Supreme Court against this ruling of the Brussels Court of Appeal.

For more information on this article, please contact Carmen Verdonck or Louise Depuydt