## Facts

- A French turbine company (European Gas Turbines S.A., successor to Alsthom Turbines à Gaz S.A.) and a U.K. intermediary (Westman International Ltd.) entered a 1985 agreement connected to an Iranian petrochemical tender.
- The agreement provided for a commission to Westman if the French company obtained the main Iranian contract and included an ICC arbitration clause with seat in Paris and French governing law.
- After the French company obtained the Iranian contract, Westman commenced ICC arbitration in Paris seeking the agreed commission.
- In a 1992 award, the tribunal upheld the agreement under French law, characterized it as a mixed brokerage/services contract, and ordered payment of a 4% commission, relying in part on Westman’s submitted expense statement.
- In the arbitration, the French company argued (i) the contract was actually for influence-peddling/bribery and (ii) Westman’s expense statement was inaccurate and included costs allegedly never incurred.
- The French company sought annulment before the Paris Court of Appeal under French procedural law permitting set-aside when enforcement would violate international public policy.

## Issues

1. Whether a contract alleged to involve bribery or influence-peddling is contrary to French international public policy so as to justify setting aside an international arbitral award.
2. Whether fraudulent conduct by a party during arbitration, affecting the tribunal’s decision, constitutes a violation of French international public policy permitting annulment.
3. The scope of the annulment court’s review (law and fact) when international public policy is invoked.

## Decision

- The Paris Court of Appeal held that contracts whose purpose is bribery or influence-peddling are contrary to French international public policy and international business ethics, but found the alleged corruption not proven on the record.
- The court found that Westman engaged in fraudulent maneuvers by presenting expense information that was false and that this conduct at least partly determined the tribunal’s decision.
- Applying the principle that fraud defeats otherwise applicable rules, the court partially annulled the award to the extent it ordered payment of the commission based on the tainted expense presentation.
- France’s Court of Cassation later rejected Westman’s appeal and upheld the partial annulment, confirming that fraud affecting an award can fall within the international public policy annulment ground.

## Legal Principles

- Agreements aimed at bribery or influence-peddling are incompatible with French international public policy; an award founded on such illegality may be annulled if the illegality is established.
- Fraud committed during arbitral proceedings that influences the award may violate international public policy and justify annulment, including partial annulment tailored to the tainted portion.
- When international public policy is invoked, the annulment judge may review both law and facts to the extent necessary to determine whether a public policy rule applies and whether it was violated.
- The international public policy annulment ground can reach procedural fraud affecting the award, not only issues related to the award’s execution.

## Conclusion

The court refused to set aside the award for alleged corruption because the evidence did not prove bribery or influence-peddling, but it partially annulled the award because fraud in Westman’s expense presentation tainted the commission determination, a result later upheld on appeal as a proper application of the international public policy ground.


Eur. Gas Turbines S.A. v. Westman Int'l Ltd., 20 Y.B. Com. Arb. 198 (Paris Ct. App. Sept. 30, 1993)