Nigeria: Violation Of The Principle Of Arbitral Collegiality As A Ground For Annulment Of Arbitral Award.

Last Updated: 5 December 2017
Article by Steve Austine Nwabueze

It has been stated that one of the reasons why parties to an arbitration submit their disputes to a panel of three arbitrators, is to ensure objectivity. The principle of collegiality in arbitration is no longer a fleeting or passing fancy. An arbitral Tribunal therefore has an obligation to deliberate, before rendering an award. If there was ever any doubt about the implications of failing to comply with this time-honoured doctrine in arbitration, such doubt was dispelled in the recently concluded case between the Spanish company, Estudio 2000 S.A. ("Estudio") and respondent Puma AG Rudolf Dassler Sport (Puma). In this case, the Court emphasized once again that well thought out decisions and equal treatment, remain the fulcrum of the arbitral process. The underlying premise of collegiality as a fundamental component of the arbitral procedure; and the fact of its absence, or abuse, forming the basis of annulment of proceedings, was emphatically highlighted.

Background Facts

On August 6, 2009, Estudio, a former Spanish distributor of Puma apparel, initiated an ad hoc arbitration against a Puma subsidiary. Estudio sought €250 million in damages following Puma's refusal to renew a distribution contract.

A conflict arose after the hearing at a panel deliberation on May 31, 2010 when, in addressing the quantum of damages, Puma's Appointee disagreed with the other Arbitrator's on the Panel, over the amount of compensation Estudio should be entitled to. Further panel discussions were then put on hold as Puma's Appointee had scheduled travel for the beginning of June.

Aware that Puma's Appointee was travelling, the other Arbitrators reconvened deliberations without him, and issued a formal arbitral award on June 2, 2010, without his knowledge or consent. Puma's Appointee was notified of the Arbitrators' decision on that same day at 9:11 pm Spanish time, by email.

The arbitrating parties did not request an expedited decision and, under the rules in place, the arbitral award did not have to be issued until July 4, 2010, over a month later.

On June 10, 2011, Puma obtained an annulment of the arbitral award before the Twenty-Eighth Judicial District of the Provincial Court of Appeal of Madrid (la Sección 28 de la Audiencia Provincial de Madrid).

In a subsequent arbitration that followed, the initial €98 million award against Puma was reduced to €42 million and Puma commenced a civil liability claim against the Arbitrators shortly thereafter.

On September 20, 2013 the Court of First Instance No. 43 of Madrid (el Juzgado de Primera Instancia No. 43 de Madrid) determined that each of the Arbitrators was liable to pay Puma €750,000 (Puma's entire portion of the fees paid to the Arbitrators during the arbitration) plus interest and costs.

On October 27, 2014, the Eighth Judicial District of the Provincial Court of Appeal of Madrid (la Sección 8 de la Audiencia Provincial de Madrid) dismissed the Arbitrators' appeal, setting the stage for a further appeal by the Arbitrators to the Spanish Supreme Court.

In addition to €1,500,000 plus interest and costs, personal reputations were at stake. The panel chair in the initial arbitration was a former Vice President of the Comisión Nacional del Mercado de Valores (the Spanish Securities and Exchange Commission) and Estudio's appointee at the initial arbitration was the sitting president of the Madrid Court of Arbitration at that time.

The Decision

In upholding the decision of the Eighth Judicial District of the Provincial Court of Appeal of Madrid, the Supreme Court on March 7, 2017 held that the actions of the Arbitrators, amounted to a violation of the principle of arbitral collegiality and, additionally, a breach of arbitrator duty under Article 21 of the Spanish Arbitration Law.

Article 21.1 of the Spanish Arbitration Law, which is based on the UNCITRAL Model Law on International Commercial Arbitration, provides:

. . . acceptance obliges the arbitrators and, where appropriate, the arbitral institution to comply faithfully with their responsibilities, being, if they do not do so, liable for damage and losses caused by bad faith, recklessness or willful misconduct. In arbitrations entrusted to an arbitral institution, the injured party may take direct action against said institution, regardless of the remedies that such institution may seek against the arbitrators. [Emphasis added]

The Supreme Court held that while it is theoretically possible that two or more arbitrators may, depending on the circumstances, exclude others when discussing certain aspects of an arbitration; the conduct the Arbitrators engaged in; when they determined and issued the arbitral award without the participation, consent, or knowledge of Puma's Appointee, was unacceptable.

The Supreme Court found it significant that there was no objective need for the Arbitrators to act as they did, considering that an arbitral award was not required (and the parties had no expectation of receiving one) until over a month after it was hastily issued on June 2, 2010. The Supreme Court also considered as important, the fact that Puma's Appointee had not unilaterally attempted to obstruct, prejudice, or otherwise negatively affect the proceedings or outcome in any way.


This decision has certainly sent shock waves around the international arbitration community, particularly regarding the direction by the Court to the Arbitrators to refund the fees paid to them – with interest and costs.

The issue of want of collegiality, as discussed in the Puma case, is not a novel one. In Sweden, for example, the absence of a proper deliberation on contentious issues, has been relied upon as a ground for annulment as early as 1924 (see Årsbackaträvaruaktiebolag v. E. Hedberg, NJA 1924 p. 569). More recently, the award in Czech Republic v. CME was challenged, though unsuccessfully, on the basis of the alleged exclusion of an arbitrator from the deliberations (Svea Court of Appeals, Case no T 8735-01). The case revolved around an investment dispute concerning a bilateral investment protection treaty which was settled by arbitration in Stockholm, Sweden. Subsequently, one of the parties challenged the award and requested that the Svea Court of Appeal should declare the award invalid or, alternatively, set aside under the Swedish Arbitration Act, on amongst others; whether one of the arbitrators was excluded from the deliberations. The Court however found as a fact that the arbitrator received all essential communications and was given due time to submit his comments. The chairman had a responsibility to issue the award without unnecessary delay. The allegations therefore that the arbitrator was excluded from the deliberations were considered to be unproven and groundless.

In France, the Court de Cassation considered the principle of collegiality in a similar context in the case of Papillon Group Corporation vs. Arab Republic of Syria and others; decided in 2011. In this case, the Court de Cassation held that given that the Paris Court of Appeal had found that a collegial meeting had taken place and that the third arbitrator had had an opportunity to voice his opposition through a dissenting opinion, the presumption that the arbitral award was rendered after deliberation, had not been refuted by the challenging party. As such, the Court de Cassation held that the Paris Court of Appeal was right in concluding from these elements that there had not been any violation of the principle of collegiality described by it as "suppose[ing] that every arbitrator has the right to debate any decision with his colleagues" (Decision n° 706, F-D, R 09-17.346, 29 June 2011).

While the rules applicable by any given Court when faced with such a scenario remains unclear, it can be argued that collegiality is an implied right of the parties derived from their right to be heard and their right to equal treatment. The decision in this case has understandably generated mixed reactions. It must be borne in mind however that this case is not merely that of two members disagreeing with the views of a third member. It is the complete disregard of the third member's views, and the total denial of the opportunity of having those views form part of the deliberation leading up to the eventual award.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
S.P.A. Ajibade & Co.
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
S.P.A. Ajibade & Co.
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions