Court of Cassation, No. 88-13.877 | Rory Wheeler, avocat (Paris) & solicitor (England)

Court of Cassation, First Civil Chamber 10 July 1990, No. 88-13.877

L & B Cassia Associés

Vs.

Pia Investments Ltd

THE COURT OF CASSATION, First Civil Chamber, delivers the following judgment:

On the appeal brought by the Lebanese general partnership L et B Cassia Associés, having its registered office at 87 Maamari Street, Tarazi Building in Beirut (Lebanon) in cassation of a decision handed down on 26 February 1988 by the Paris Court of Appeal (1st chamber, supplementary section), at proﬁt of the société de droit d’Etat Sharjah Pia Investments Ltd, having its registered office at 107 Abdul Karim Building, Malik Faisal Street, PO Box 2295 Sharjah (United Arab Emirates)

The claimant invokes, in support of its appeal (in French Pourvoi en cassation), the four grounds of cassation annexed to the present judgment

According to the facts as stated in the judgment under appeal (Paris, 26 February 1988), a dispute occurred between the Lebanese company “L & B Cassia Associés” (the Cassia company) and the “Board of Control for cricket in Pakistan” (BCCP) one the one hand and Pia Limited Investments based in the Arab Emirate of Sharjah (Pia) in connection with the execution of an architectural contract on the other hand, relating to the extension of the Karachi stadium. The “contract agreement”, indicated as being made in this city but not dated, only included the initials of the parties at the bottom of the page. The company Cassia filed a request for arbitration with the Court of Arbitration of the International Chamber of Commerce on the basis of the arbitration clause inserted in the contract. By a preliminary award rendered in Paris on 25 September 1986, against which an action for annulment brought on 2 January 1987 by Pia company, the arbitrator declared that it had jurisdiction to hear the dispute although the defendants denied the existence of an arbitration agreement. The Paris Court of Appeal, by an irrevocable judgment of 7 July 1987 by which rejected a request for annulment of an award dated 18 January 1987 in which the arbitrator had refused to stay the proceedings. The judgment under appeal set aside the preliminary award on the basis of article 1502-1 of the new Code of Civil Procedure.

On the first and second ground together:

Cassia claims that this judgment wrongly declared that the action for annulment was admissible and in deciding that Pia, which had submitted a counterclaim to the arbitrator, was still entitled to oppose the absence of any arbitration agreement since that claim was subject to reservations, the Court of Appeal violated Article 1492 of the new Code of Civil Procedure and the principles governing international arbitration, according to the first ground of appeal. According to the second ground, that the existence of the arbitration agreement was “virtually” res judicata following the judgment of 7 July 1987, so that by deciding that there was no identity of subject-matter, the Court of Appeal again violated article 1351 of the Civil Code.

However, on the one hand, the Court of Appeal held that Pia contested the arbitrator’s judicial power from the moment the case was referred to him and that the presentation by it, on 4 May 1987, of a statement of defence containing a counterclaim with the most express reservations and to avoid a decision being handed down against it on the sole basis of the opposing claims, cannot be considered as a waiver of its jurisdictional objection. It follows from these findings that Pia, in submitting a counterclaim after the arbitrator’s refusal to stay the proceedings, did not, contrary to what the appeal maintains, adopt two irreconcilable procedural attitudes in a single instance where the arbitrator’s power is based solely on the common will of the parties, the expression of which was the very subject of the dispute.

On the other hand, by alluding to the fact that the parties agreed to have recourse to arbitration, the judgment of 7 July 1987, which already stated in its reasons that Cassia had not waived its ground of lack of jurisdiction, confined itself to taking as a given what had been decided by the award of 25 September 1986, which from that date had a of res judicata effect. The aforementioned judgment did not settle the question of the arbitrator’s jurisdiction, which was not before the Court of Appeal;

On the third ground:

The contested judgment is criticised for having annulled the preliminary award, whereas by deducting the absence of proof of the parties' willingness to resort to arbitration from that of a final agreement between the parties, in the light of Pakistani and French law, on the very content of the “contract agreement” in which it was inserted, the court allegedly disregarded the principle of the autonomy of the arbitration clause in international arbitration. Thus, it follows that the conditions for the existence of such a clause must be determined without reference to those of the main contract and by reference to international trade usages alone.

However, in international arbitration, the autonomy of the arbitration clause is limited by the existence, in terms of form, of the main agreement containing the clause invoked; that this existence must necessarily be assessed according to the law which, according to the principles of private international law, governs the form of the agreement. The judgment under appeal, after affirming the principle of autonomy, legitimately established the existence of the arbitration clause according to a domestic law designated by the conﬂict rule without incurring the complaints of the ground which, therefore, is not better founded.

On the fourth ground, taken in its various parts :

The Court of Appeal, in order to set aside the award, is still accused, on the one hand, of having applied Pakistani law with stricter formal requirements than those of the French law of the forum and says that the contract was governed by Pakistani law whereas the contract, which had as its object the design of plans, was located in Lebanon, the headquarters of the architect’s firm where, also, the fees were paid. On the other hand, Cassia states that the Court of Appeal wrongly refused to grant the probative force of a written document to the “contract agreement” because the parties had only initialled it. Finally, Cassia considers that the Court of Appeal did not respond to its submission, the purpose of which was to prove the existence of the agreement by the answers given to the arbitrator by the joint director of BCCP and Pia.

However, first, the Court of Appeal, which noted the parties' failure to indicate the law to which they intended to subject their relationship, was well-founded in its view that, because of the evidence it had found concerning the place of supply of the architectural services and the “initialing” of the contract, the contract was connected to (in French: localisé au) Pakistan, whose law thus governed both the parties' relations with each other and the law of the country in which they had concluded the contract. Contrary to what the plea maintains, the evidence of the existence of the contract and the arbitration agreement was reviewed by the Court of Appeal concerning both the French law of the forum and Pakistani law. Secondly, the last two complaints of the ground only tend to vainly call into question the discretionary assessments by which the Court of Appeal retained the equivocal nature of the signﬁcation of the initials affixed by the parties to the written document as well as the sufficient of the elements of evidence.

FOR THESE REASONS :

DISMISSES the appeal.