The Court of Cassation upholds the refusal to compensate the loss of opportunity arising out of the annulment of an award due to the arbitrator’s negligence, and subsequent reduced court damages.

In a decision dated 14 February 2024, the Court of Cassation ruled on the liability of the arbitrator who had signed his award after the expiry of the arbitration, resulting in the annulment of the award. Subsequently, the Court of Appeal, ruled on the merits of the dispute and awarded a lower amount of compensation than that ordered by the arbitrator.

As a result, the party aggrieved by the difference in compensation brought a claim against the arbitrator for liability and compensation for the loss it claimed resulted from the loss of the opportunity to benefit from the full amount awarded by the annulled award.

The question was whether this loss could be classified as a loss of opportunity and whether the arbitrator, because of his proven negligence, could be held liable. The Court of Cassation ruled twice in the negative, concluding in particular that there was no causal link between the arbitrator’s fault and the alleged loss.

First, the Court of Cassation reiterated the principle that even if the alleged damage could be described as loss of opportunity, the arbitrator’s negligence in the performance of his duties could not lead to his being ordered to pay damages equivalent to the annulled awards.

Accordingly, the Court held that the injured party could not seek, by way of compensation, the benefit of the entire compensation ordered by the annulled award since compensation for loss of opportunity can only correspond to a fraction of the loss suffered that could have been avoided.

Importantly, the Court emphasised that the reduction in the damages awarded did not result from the arbitrator’s fault, but from the sovereign assessment of the trial judges before whom the injured party had been able to plead its case. It followed that its damages could not be characterised as a loss of opportunity, nor could they justify an award of damages against the arbitrator in the absence of a causal link.

Reference: Cass., civ. 1, 14 February 2024, No. 22-22.469




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