Paris Court of Appeal, No. 2001/16623 | Rory Wheeler, avocat (Paris) & solicitor (England)

Paris Court of Appeal - 28 November 2002 - No. 2001/16623

PANALPINA WORLD TRANSPORTS HOLDING AG Vs. TRANSCO

On 8 August 2001, Panalpina World Transports Holding AG (“Panalpina”), incorporated under Swiss law which is a subsidiary of Panalpina International Transports, brought an action for annulment against an award rendered in Paris on 3 July 2001 under the auspices of the ICC by Mr Y Z, sole arbitrator, ruling ex aequo et bono:

noted that Panalpina is entitled to the rights of Panalpina Transports Mondiaux, signatory of the technical assistance and representation agreement concluded on 3 October 1983 with Transco in the field of maritime consignment;
noted that the first question appearing in the “Disputed Points” listed in Chapter VI of the Terms of Reference has become irrelevant as a result of the agreement of the parties during the arbitration proceedings on the application of French law to the present dispute;
declared Transco’s claim admissible and rejected the time bar raised by Panalpina;
said that the denunciation of the technical assistance and representation agreement of 3 October 1983 which took place on 29 August 1986 with effect from 1 September 1986 was abusive and consequently ordered Panalpina to pay Transco the sum of FCFA 233,660,787 by way of damages;
said that Transco did not provide proof of the existence and content of the so-called “safe deposit box” agreements and dismissed its claim for payment of the sum of FCFA 500,000,000 as damages for unfair competition;
states that Panalpina cannot be responsible for the repayment of the sum of FCFA 200,000,000 in respect of the loan and interest from the BNDDC and rejected Transco’s claim;
says that there is no need to order the sharing of the profits of the Maritime Consignment Agency that would have been agreed in the so-called “safe deposit box” agreements;
dismissed Panalpina’s counterclaim for payment of the sum of FRF 400,000;
states that each party will retain the costs and fees incurred in its defense; ordered that the costs of the present arbitration fixed by the International Court of Arbitration in the amount of USD 90,000 be borne by Panalpina up to two thirds and by Transco up to one third. Each of the parties having paid half of the advance, that is USD 45,000 each, Panalpina is ordered to pay Transco the sum of USD 15,000.

Panalpina argued that the award should be set aside according to Article 1502-3 and 1502-4 of the New Code of Civil Procedure, for failure to comply with the terms of reference and due process (in French: principe de la contradiction), because the arbitrator deducts from the authorization to rule ex aequo et bono an implicit renunciation to avail himself the statute of limitations. It states that the arbitrator should not rule on the basis of an amicable settlement but on the basis of law. Panalpina asked the Court to order Transco to pay it EUR 45,734.71 in damages. It concluded that Transco should be ordered, in addition to the costs, to pay it EUR 7,622.45 on the basis of Article 700 of the New Code of Civil Procedure.

Transco, a legal entity under Congolese law, alleges that the action for annulment must be rejected. It argued that the amiable composition clause contained in the Terms of Reference was necessary, and that the arbitrator had complied with the mandate given by waiving the statute of limitations. Transco asks the Court to order Panalpina to pay it EUR 15,243 in damages for abusive and dilatory action, EUR 4,574 under Article 700 of the New Code of Civil Procedure and to bear the costs.

UPON WHICH:

Panalpina states its desire for the arbitrator to rule, not in amiable composition, but in law, in particular on the point of the ten-year statute of limitations, even if, assuming that the said statute of limitations is not acquired, the court rules in equity on the quantum. However, the arbitrator inferred from the fact that he was authorized to rule ex aequo et bono, an implicit waiver on his part to invoke the limitation period. Panalpina considered that, even as an amiable composer, the arbitrator should have ruled first in law on the issue of limitation.

The parties, in the Terms of Reference, empowered the arbitrator to rule ex aequo et bono (point VII of the Terms of Reference), as provided in Article 17 (3) of the Arbitration Rules of the CLA applicable to the proceedings under the arbitration clause of the Technical Assistance and Representation Agreement of 3 October 1983;

In his award, the arbitrator said that the time bar claim raised by Panalpina “must be examined on first hand in the light of the provisions of French law, the law applicable by the will of the parties, and on the other hand according to the powers given to the sole arbitrator to rule ex aequo et bono”; after noting that prescription is a right freely available to the parties, he said that Transco’s inaction for thirteen years could be explained by the political situation in the Republic of Congo in the 1980s and 1990s, and concluded:“On the basis of these considerations, the Sole Arbitrator, in search of the most just and equitable solution, rejects Panalpina’s limitation period defence, even if it is legally founded, and declares Transco’s claim admissible”;

By allowing the arbitrator to rule ex aequo et bono, the parties have accepted that the arbitrator may depart from the legal rule, subject to international public order;

By disregarding a time bar acquired in law which the parties could have waived, the arbitrator fulfilled his mission, in accordance with the clear and unambiguous provisions of the Terms of Reference signed by Panalpina and Transco, which did not restrict the power to rule in equity to the sole evaluation of the prejudice as stated without reason by Panalpina, which moreover did not prove any violation of the principle of contradiction ;

That the action for annulment is consequently dismissed;

Panalpina had no serious grounds for its action for annulment, which had no chance of success, that it could not reasonably be unaware of the meaning and scope of Article 17(3) of the CTC Arbitration Rules, according to which the Terms of Reference were drawn up, by initiating international arbitration proceedings with the assistance of counsel and then feeling offended by the fact that the arbitrator had made use of the powers conferred on him by the parties; that it is a fault which has degenerated into an abuse of its right to institute legal proceedings and for which it must be made good; Panalpina must be ordered to pay Transco the sum of EUR 7.500 by way of damages;

Panalpina, ordered to pay the costs, cannot claim any compensation on the basis of Article 700 of the New Code of Civil Procedure, according to which it must be ordered to pay Transco the sum of EUR 4,574 by way of damages;

FOR THESE REASONS

The action for annulment of the award delivered in Paris on 3 July 2001 is dismissed,

Orders Panalpina World Transports Holding AG to pay Transco the sum of EUR 7,500 as damages for abuse and the sum of EUR 4,574 pursuant to Article 700 of the new Code of Civil Procedure,

Rejects all other claims of the parties,

Condemns Panalpina World Transports Holding AG to pay the costs and grants SCP Ménard et Scelle-Millet, admitted to the Court, the benefit of the right provided for in article 699 of the new code of civil procedure.