Court of Cassation, No. 89-21.273

Court of Cassation. Commercial Chamber, 3 March 1992, No. 89-21.273

Challenged decision: Paris Court of Appeal, 14 February 1989

OFER BROTHERS (OFER)

vs.

THE TOKYO MARINE AND FIRE INSURANCE CO LIMITED AND OTHERS (INSURERS)

THE COURT OF CASSATION, COMMERCIAL, FINANCIAL AND ECONOMIC CHAMBER, delivered the following judgment:

On the appeal (in French Pourvoi en cassation) brought by OFER Brothers, a company incorporated under Israeli law, whose registered office is located in Merkazing building industrial Area, …),

in cassation of a judgment rendered on 14 February 1989 by the Paris Court of Appeal (1st chamber, section C), to the benefit of:

1°/ Tokyo marine and fire insurance Co limited, whose registered office is in Paris (9e),

2°/ Royal insurance NW, whose registered office is in Rotterdam (Netherlands), post bus 64, 3000 AB,

3°/ l’Alsacienne, whose registered office is in Strasbourg (Bas-Rhin), …

118-119,

4°/ Assurances du groupe de Paris risques divers (AGP RD), whose registered office is in Paris (9th), …,

5°/ Insurance CY of North America, which became today Cigna France insurance company, whose registered office is in Paris (8th),

6°/ Suisse assurances, whose registered office is in Lyon (7th) (Rhône), …, BP 7093,

7°/ Mannheimer Versicherungs-Gesellschaft Mannheim, whose registered office is in Paris (2nd),

8°/ Black Sea and Baltic, whose registered office is in Paris (8th),

9°/ AG 1697, whose registered office is in Paris (17e), …,

10°/ Winterthur assurances, whose registered office is in Paris (9e),

11°/ La Neuchateloise, general insurance company in Neuchatel, whose registered office is in Paris (8e),

12°/ Royal insurance CY Ltd, whose registered office is in Paris (8e),

13°/ Guardian royal exchange assurance PLC, registered office is in Paris (8th), …,

14°/ Commercial union assurance CY PLC, whose registered office is in Paris (2nd), …,

15°/ Allianz Versicherungs AG, whose registered office is in Puteaux (Hauts-de-Seine), …, La Défense 10,

16°/ Nord-Deutsche Versicherungs AG, whose registered office is in Paris (8th), …,

17°/ Italina assicurazioni trasporti SIAT, whose registered office is in Paris (2nd), …,

18°/ Tiashi marine and fire insurance (UK) Ltd, whose registered office is in Paris (9th), …,

19°/ Les Assurances générales de France, whose registered office is in Paris (2nd), …,

20°/ Sovereing marine and general insurancy Ltd, whose registered office is in London (Great Britain), 10, Trinity square, EC3p, 3AX,

21°/ NV general accident fire and life assurance Corp., whose registered office is in Paris (9th), …,

22°/ NV Ennia risques divers, today named Aegon

insurance group, whose registered office is in Paris (2nd), …,

23°/ Negev star, whose registered office is in Tel Aviv (Israel), 2 ter, Hakirya Street, POB 98,

defendants to the cassation;

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

THE COURT, in the public hearing of 21 January 1992, at which were present: Mr Bézard, President, Mr Nicot, Reporting Counsellor, Mr Hatoux, Mrs Pasturel, Mr Edin, Mr Grimaldi, Mr Apollis, Mrs Clavery, Mr Lassalle, Mr Tricot, Counsellors, Mr Le Dauphin, Rémery, Referendary Counsellors, Mr Curti, Advocate General, Ms Arnoux, Clerk of the Chamber.

Upon the report of the counsellor Mr Nicot, the observations of Mr Roger, lawyer for Ofer brothers from SCP Lemaître, and Monod, lawyer for The Tokyo marine and fire insurance Co limited and the twenty-one other defendants, the conclusions of Mr Curti, Advocate General, and after deliberating in accordance with the law;

Whereas, according to the terms of the judgment under appeal (Paris, 14 February 1989), by virtue of a bill of lading issued by the captain of the vessel “Tamar”, acting on behalf of OFER brothers (OFER), a cargo of tea was loaded on board this vessel in the port of Rouen bound for Italy. The Tokyo marine and fire insurance company and twenty-one other insurance companies (the insurers) sued OFER for damages before an arbitral tribunal, by relying on an arbitration clause contained in the journey’s charter-party to which the bills of lading referred, and declaring themselves subrogated to the rights of the consignees of the goods whom they had compensated for the damage noticed on the arrival of the vessel. OFER filed an action for annulment against the award on the basis of Article 1502 of the new Code of Civil Procedure.

On the first ground:

Whereas, OFER criticises the judgment for dismissing its action for annulment against the arbitral award of 17 November 1987. Indeed, the judgement condemned OFER to pay compensation to the insurers in its capacity as a maritime carrier even though, according to the appeal, the holder of a bill of lading may not be faced with the enforcement of a clause of the charter-party which was not reproduced in the bill of lading and was not subject to a definitive acceptance by the holder of such bill. Thus, by extending the effects of the arbitration clause to OFER and presuming the latter’s knowledge thereof although the arbitration clause was not reproduced in the bill of lading, the Court of Appeal violated Articles 1442, 1502-1, 1504 of the Civil Code by misapplication.

However, whereas, the wording of the judgment entails that the bills of lading “including” the arbitration clause of the charter-party and signed by the ship’s captain was issued under the stamp of OFER, which therefore appeared thereon in its capacity as a maritime carrier. Whereas, therefore, OFER, far from being faced with the enforcement of the arbitration clause in its capacity as “holder of a bill of lading”, itself issued these documents and thus proposed this clause to the shipper for acceptance.

Hence, the ground lacks in fact.

On the second ground, taken in its two branches:

Whereas OFER also criticises the judgment for dismissing its claim for the annulment of the arbitral award, even though, according to the appeal (in French Pourvoi en cassation), on one hand, the Brussels Convention of 25 August 1924 prohibits any clause restricting the one-year time-limit provides for therein. The Court of Appeal annulled a clause providing for a six-month period for to refer to the arbitrators on the case, on the expiry of which the domestic courts regained jurisdiction. Therefore, the Court mistook a clause relating to the referral of cases to the arbitral tribunal with a clause relating to a time-limit violated by misapplication of Articles 1502-1 and 1504 of the new Code of Civil Procedure and Articles 3-6 and 3-8 of the above-mentioned Brussels Convention. On the other hand, the Court of Appeal, which rejected its argument stating that because of the indivisibility between the three stipulations of the arbitration clause which together organise access to arbitration, this clause could not be subject to partial annulment without providing any explanation, violated Article 455 of the New Code of Civil Procedure;

However, whereas, according to the text produced by OFER in its submissions, the clause provided that, in the event of non-compliance with the stipulation providing that the right to submit any dispute to arbitration would cease on expiry of a six-month period, the claim would be considered “abandoned” and “absolutely time-barred”. Therefore, the Court of Appeal correctly ruled that this clause fell within the scope of the prohibition provided for in the Brussels International Convention dated 25 August 1924 and regarding the shortening of the one-year time-limit. With this reasoning, and while specifying that the annulment only affected the stipulation of the clause relating to the time-limit for the referral of cases to the arbitral tribunal, the Court of Appeal responded to the argument relating to the indivisibility of the stipulations of the arbitration clause that organises the recourse to arbitration. The ground is unfounded in either of its two branches.

And on the third ground:

Whereas, finally, OFER criticises the judgment on the same basis, even though, according to the appeal (in French Pourvoi en cassation), “the insurer has no legal action against the third party if he does not have to be guaranteed for any reason whatsoever”. The Court of Appeal did not investigate, as it was invited to, whether the insurance policies evidenced that the insurers paid the sums under their contract. Therefore, the court of appeal deprived its decision of legal basis in respect of Article L. 172-29 of the Insurance Code.

However, whereas, the Court of Appeal held that the arbitral tribunal decided that the reality of the payments made by the insurers was not disputed and that OFER did not establish that the loss was due to a defect in the goods. Therefore, it proceeded with the investigation referred to in the appeal and the ground is unfounded.

FOR THESE REASONS:

Dismisses the appeal;

Orders OFER Brothers to pay to the defendants the costs and expenses of the enforcement of the present judgment;

Thus done and ruled by the Court of Cassation, Commercial, Financial and Economic Chamber, and pronounced by the President at his public hearing of the third of March one thousand nine hundred and ninety-two.