Court of Cassation, No. 89-21.528

Court of Cassation, First Civil Chamber, 22 October 1991, No. 89-21.528

VALENCIANA DE CEMENTOS PORTLAND

vs.

PRIMARY COAL

On the single ground, taken in its three branches:

The American company Primary Coal (Primary) undertook to deliver, for 3 years, to the Spanish company Valenciana de Cementos Portland (Valenciana) various quantities of coal, at a price to be fixed every 6 months. The contract included an arbitration clause which was executed by Primary. Article VIII of The Terms of Reference stipulated that, in addition to the Rules of Arbitration of the International Chamber of Commerce, the rules of procedure will be those of the New Code of Civil Procedure on international arbitration. Moreover, article IX of the terms of reference stipulated that the applicable law, having not been chosen by the parties, will be determined by a partial award. The arbitrator ruled, in the said partial award, that the dispute shall be settled in accordance with applicable practices in international trade, otherwise called “lex mercatoria”, deemed the most appropriate law.

Valenciana objects to the judgment under appeal (Paris, 13 July 1989) for having rejected its action for annulment of this award, and for having violated articles 1496, 1502-3, and 1504 of the New Code of Civil Procedure. On the one hand, the arbitrator did not comply with his mission to rule, in the absence of a choice by the parties, according to the law designated by the rule of conflict that he deemed appropriate. On the other hand, the arbitrator similarly did not comply with his mission, in deciding that the dispute shall only be settled according to international trade practices, thereby excluding all state laws. Finally, the arbitrator has not indicated the conflict-of-law rule applied, nor has he provided any element justifying the connection to the above-mentioned practices.

However, by referring to the “set of international trade rules established by practice and having received approval by national case law”, the arbitrator ruled in law as required by the Terms of Reference. Consequently, it was for the court of appeal, petition for annulment as set out under articles 1504 and 1502-3 of the New Code of Procedure, to verify the conditions of determination and implementation by the arbitrator of the chosen rule of law.

Therefore, it follows that the ground cannot be upheld in any of its branches;

FOR THESE REASONS:

DISMISSES the appeal