Court of Cassation, No. 85-12.702

Court of Cassation, first Civil Chamber 10 February 1987, 85-12.702

CREATIONS BIANCA FRANCE

vs

S.A.I.M.

According to the terms of the judgment under appeal (Paris, 6 February 1985), the French company Creations Bianca France, whose manager is Mr. Y and the Italian company S.A.I.M. had been in business relation since 1975.

In January 1980, the manager of S.A.I.M. met Mr. Y at the home of S.A.I.M.’s lawyer and obtained from it the signature of a deed by which he personally guaranteed the sums owed by Bianca to S.A.I.M. on the amount of 1,682,288 francs, including the interest costs and incidental expenses.

Mr. Y filed a complaint against the lawyer before the Bar Association. An arbitration agreement was signed under the auspices of the rapporteur chosen by the President of the Bar Association. This rapporteur was chosen as arbitrator by the two companies and Mr. Y to resolve their disputes and was granted the powers of an amiable compositeur. The arbitrator ordered the company Bianca to pay S.A.I.M. the Italian company a sum of 1,292.192 francs with the interest and declared Mr. Y… personally liable for the same sum as a guarantor.

The Court of Appeal rejected the request to annul the award that Bianca and Mr. Y… had lodged against this award based on articles 1502-1, 1502-5 and 1504 of the new Code of Civil Procedure.

On the first ground

Mr. Y and Bianca first claim that the arbitration agreement was null and void, based on the fact that Mr. X…, who had signed it on behalf of the S.A.I.M had no capacity to do so. They object to the Court of Appeal’s refusal to find that the arbitration agreement was null and void. The Court of Appeal found that, assuming that Mr. X had not capacity, the arbitration agreement was expressly ratified by S.A.I.M., in accordance with the provisions of the Italian Civil Code, when it appeared and pleaded before the Court of Appeal, represented by its manager. According to the plea, such ratification, subsequent to the award, could not remedy the fact that it was null and void.

However, the ratification of the arbitration agreement, for which the Court of Appeal discretionally assessed the regularity under Italian law, validating retroactively the agreement in so far as it was necessary, no longer allowed the annulation of the award on the ground that the arbitrator had ruled without an arbitration agreement, under the terms of Articles 1502-1 and 1504 of the New Code of Civil Procedure.

The plea is therefore unfounded.

On the second ground

Mr. Y… and Bianca were further seeking the annulment of the award under Articles 1502-4 and 1504 of the new Code of Civil Procedure for breach of due process (in French: principe de la contradiction). They argued that the arbitrator had only ruled on a fraud claim (in French: abus de blanc-seing) concerning an agreement of 1 September 1975, without dealing with a forgery claim that was raised before him. They now claim the Court of Appeal failed to address their claims on this issue.

However, the Court of Appeal noted that the arbitrator had decided the forgery claim raised before him by clearly expressing the opinion that the means developed were irrelevant and that the disputed document should be considered sincere. It added that the arbitrator, an amiable compositeur, was not obliged to follow the parties in the detail of their arguments and that the failure to state reasons was not a ground for annulment of international arbitration awards. It thus replied to the pleadings relied upon. The grievance was unfounded.

On the third ground:

Mr. Y… and Bianca, availing themselves of Articles 1502-5 and 1504 of the new Code of Civil Procedure which provide for the annulment of an award rendered in France in international arbitration when its recognition or enforcement is contrary to international public order, further maintained that the undertaking given on 22 January 1980 under the above-mentioned conditions was not valid. In their plea for cassation, they claimed that the professional negligence (in French: faute professionnelle) committed by the lawyer established the disloyalty, if not fraud, of the creditor and his agent at the time of signing the deed and led to the nullity of the guarantee.

However, the Court of Appeal has explained twice its decision on this issue. First, that S.A.I.M.’s lawyer’s alleged negligence is not enough to confirm the existence of fraud or any other defect having affected the consent of Mr. Y… Second, that it was not for the Court to assess the arbitrator’s judgment on the validity of that consent. Thus, without even having to investigate, as the Court observed, whether or not the rule invoked by Mr. Y and Bianca was a matter of public order within the meaning of French private international law, the Court legally justified its decision. This plea is no better founded than the previous ones.

FOR THESE REASONS:

Rejects the appeal