## Facts

- In 1977, Cubic Defense Systems, Inc. (Cubic) entered into two contracts with Iran’s Ministry of Defense and Support for the Armed Forces that included ICC arbitration clauses.
- Following political upheaval in 1979, the contractual relationship broke down and the parties did not complete performance.
- In 1991, the Iranian ministry filed a request for ICC arbitration; the ICC’s International Court of Arbitration (ICA) administered the arbitration under the ICC Rules.
- The arbitration terms were signed in 1993.
- In 1995, the arbitral tribunal issued a provisional decision rejecting the argument that the proceedings were barred by lapse of time based on the scheduling history.
- Cubic objected to the tribunal’s provisional ruling and asked the ICA to review that ruling and to replace the arbitrators.
- The ICA declined, explaining that, under the ICC Rules, it was not authorized to question or amend decisions of the arbitral tribunal.
- In 1997, Cubic sued the ICC in Paris, alleging the ICC failed to fulfill contractual obligations connected to the administration of the arbitration and seeking, among other relief, annulment of the “contract” for organization of the arbitration.
- The Paris regional court dismissed Cubic’s claims; Cubic appealed to the Paris Court of Appeal.

## Issues

1. Whether Cubic’s action seeking annulment of the contract organizing the arbitration (including on a “lack of cause” theory) was time-barred under French law as a relative nullity subject to a five-year limitation period.
2. Whether the ICC arbitration framework—particularly the separation between the ICC’s administrative role and the tribunal’s decision-making role, and the ICC Court’s scrutiny of draft awards—rendered the organizing contract unlawful under international public policy because it impaired arbitrator independence and impartiality.
3. Whether Article 6(1) of the European Convention on Human Rights applied to the ICC as a private arbitral institution, and if so, whether Cubic showed a denial of a fair hearing (including reasonable time and an independent and impartial tribunal).

## Decision

- The Paris Court of Appeal rejected Cubic’s claims and affirmed dismissal.
- The court held the contract-nullity action was time-barred because it sought protection of Cubic’s private economic interests and therefore alleged, at most, a relative nullity subject to a five-year limitation period.
- The court held the ICC Rules maintain a separation between the ICC’s organizational function and the tribunal’s jurisdictional function; the ICC Court exercises no adjudicative power over the merits.
- The court held that scrutiny of draft awards by the ICC Court did not constitute interference with the tribunal’s adjudicative mission and served to ensure the effectiveness of arbitration, so the organizing contract was lawful under international public policy.
- The court held Article 6(1) ECHR was not applicable to the ICC in this setting because the Convention governs states and state courts; in any event, Cubic did not show it was denied the protections it invoked.

## Legal Principles

- Under French law, the limitation period for an action in nullity depends on whether the nullity protects only a party’s private interests (relative nullity) or the general interest (absolute nullity); a relative nullity claim is subject to a shorter prescription period.
- ICC institutional arbitration distinguishes between (a) the institution’s administrative/organizational role and (b) the arbitral tribunal’s jurisdictional role; the ICC Court does not decide the dispute on the merits.
- Institutional scrutiny of draft awards by the ICC Court, aimed at supporting enforceable and effective awards, is not in itself improper interference with the arbitral tribunal’s decision-making function and is compatible with international public policy.
- Article 6(1) ECHR is directed to states and state courts; it does not generally apply as a direct standard governing a private arbitral institution’s internal processes, and a party must in any event prove an actual denial of the guarantees asserted.

## Conclusion

The Paris Court of Appeal affirmed dismissal of Cubic’s suit against the ICC, holding that Cubic’s attempt to annul the arbitration-organizing contract was time-barred as a relative nullity claim and that the ICC’s institutional features—especially the separation between administration and adjudication and the ICC Court’s draft-award scrutiny—were lawful and consistent with international public policy; the court also rejected reliance on Article 6(1) ECHR as inapplicable to the ICC and, in any event, unproven on the facts.


Cubic Defense Systems Inc. v. ICC, Document #05-990426-109 (1998)