Personal Thoughts on Admissibility of Third Party Opposition Against Arbitral Awards
I wanted to share with you some general personal thoughts regarding the recent decision of the Belgian Constitutional Court (the Constitutional Court) holding that third parties should be entitled to lodge third party opposition (tierce opposition) against arbitral awards.
As we discussed before, the Constitutional Court ruled that Article 1122 of the Belgian Judicial Code violated Articles 10 and 11 of the Belgian Constitution (i.e. the provisions of the Belgian Constitution on equality and non-discrimination), as this provision allowed third parties to challenge the validity of judgments rendered by a civil or a criminal court by means of third party opposition but did not offer third parties the same possibility to challenge arbitral proceedings.
According to its current reading, third party opposition under Article 1122 of the Belgian Judicial Code aims at bringing the parties back (for new proceedings) before the same judge who previously ruled on the case in the absence of the third party. Until the decision of the Constitutional Court of 16 February 2017, however, this solution applied to judicial proceedings only.
However, now that the Constitutional Court has found that this possibility should also be offered to third parties to arbitral proceedings, does this mean that new arbitral proceedings (in the presence of the third party) will have to take place before the initial arbitrators in the event that a third party files a third party opposition?
Certainly not… Indeed, such a solution would not only seriously jeopardize the whole purpose of opting for arbitration in the first place (i.e. confidentiality, etc…) but would also directly contradict the arbitration agreement, which – by definition – excluded the participation of third parties to the arbitral proceedings.
Moreover, such a solution would lead to the absurd result that the third party would then become a party to the arbitral proceedings and would then be in a position to rely on Article 1717 of the Belgian Judicial Code in order to challenge the resulting award (something that the Constitutional Court has explicitly excluded).
So the Belgian law maker (who will soon be called upon to amend Article 1122 of the Belgian Judicial Code in order to reflect the judgment of the Constitutional Court) will need to come up with some sort of creative solution and cannot simply replicate Article 1122 of the Belgian Judicial Code in the arbitral context.
A number of different solutions might be open to the Belgian legislator. My guess, however, is that Article 1122 of the Belgian Judicial Code will be amended to provide for a hybrid solution whereby third parties will indeed be allowed to file a third party opposition against an arbitral award. However, instead of organizing new proceedings before the same arbitrators that previously ruled on the case, those proceedings will be held before national courts.
With respect to the standard of review that those courts will apply, I assume that they will only be allowed to conduct (based on the new grounds brought forward by the third party) a balance of interests between the enforcement of the award on the one hand, and the situation of the third party on the other hand. The courts will, however, not be in a position to re-assess the facts and reasoning that led the arbitral tribunal to find one party liable. Rather, they will only be able to find alternative solutions to mitigate the negative effects that the award might generate on the third party.
Importantly, I must add that I haven’t had the time to conduct a thorough comparative analysis in order to examine if other solutions are available in countries that also allow third party opposition against arbitral awards (France (to some extent) and Italy for instance?). Do you have any views on this topic? If so, do not hesitate to let me know.