Court of Cassation, No. 86-12.015

Court of Cassation, First Civil Chamber, 8 March 1988, No. 86-12.015

THINET ET CIE

vs

REVETEMENT DU SOL

On the sole ground, taken in its four branches:

Whereas, according to the statements of the judgment under appeal (Paris, 31 January 1986) the company Thinet et Cie has concluded a contract for the construction of buildings in Saudi Arabia. For the performance of this contract and, “acting on behalf of its establishment in Saudi Arabia”, it signed with the Société Revêtement du Sol (SRS) a subcontract. The latter company was put into administration by judgment of the 29 January 1980, which was converted into liquidation on 20 April 1982.

A dispute arose between the parties to the sub-contract about the clearance of their accounts, leading them to sign a settlement. In their award, dated 19 June 1984, the arbitrators retained as a party to the litigation, the company Thinet & Cie, currently Thinet Devars Naudo, acting on behalf of its establishment in Saudi Arabia, finding that this company is the “legal entity” Thinet-Dumez, also known as the Thinet Dumez Rusk Program.

the arbitrators further noted that the Commercial Court of Paris, by judgment of the 28 February 1983, found SRS’ liabilities in the liquidation process amounted to 27,182,190 francs 23, on an unsecured basis. They pointed out that this judgment has become res judicata. Finally, they found the respective breaches of the parties and, “as the decision of the commercial court”, ordered SRS to pay to Thinet & Cie. the sum of 11,817,806 francs. The judgment under appeal pronounced the annulment of the award, at the request of Mr. X…, acting as trustee of SRS, pursuant to Article 1484, 6° and 3° of the Code of Civil Procedure.

Whereas the company Thinet & Cie object to the judgment of the court of appeal to have thus ruled, arguing as follows:

Firstly, that litigation arising out of a subcontract related to the main contract performed abroad, gives rise to an international arbitration, and that basing itself on a text relating to domestic arbitration, drafted in different terms, the judgment breached, by false application, article 1484, 6° of the Code of Civil Procedure.

Secondly, that the award, by acknowledging to be bound, as regards the Thinet claim on SRS, by the figure fixed by a judgment of the Commercial Court on the production of the company Thinet, has respected the rule of suspension of individual proceedings, so that by basing its decision on the disregard by the arbitrators of this principle of public order, the court of appeal would have violated article 1484-6 of the new French Code of civil procedure.

Thirdly, that the compensation between related debts resulting from the same contract is possible despite the procedure of verification of the debts, and thus that the judgment could not, according to the means, accuse the arbitrators of having proceeded to the compensation without violating the aforementioned article.

Finally, that the arbitral tribunal was necessarily led to specify the capacity of the parties to determine the reciprocity of claims and debts, and that by criticizing them for having, in doing so, exceeded the limits of its mission, the judgment violated article 1484, 3° of the new Code of Civil Procedure; public order, the court of appeal violated article 1484, 6 ° of the new Code of Civil Procedure.

But whereas, first of all, the arbitral award made in France in an international arbitration may, pursuant to Article 1504 of the new Code of civil procedure, be the subject of an action for annulment on any of the grounds listed in Article 1502, which provides, in its 5th paragraph, a ground for annulment where recognition or enforcement of the award would be contrary to international public policy, which relates in particular to the hypothesis where the arbitrators have violated a rule considered to be of international public order; in the present case, the principle of Suspension of individual proceedings for bankruptcy, the violation of which was upheld by the court of appeal, is both of internal and international public order; that the first ground cannot be upheld;

Whereas, then, in order to find that violation, the judgment under appeal was not based on the consideration by the arbitrators of the decision of the commercial court which fixed the amount of the Thinet’s debt, but only on what they have condemned SRS to payment; that thus the decision is legally justified, regardless of the reasons over-abundant, criticized by the last two branches;

From which it follows that the ground cannot be received in any of its four branches;

FOR THESE REASONS:

DISSMISSES the appeal