Court of Cassation, No. 02-13.252 | Rory Wheeler, avocat (Paris) & solicitor (England)

Court of Cassation, First Civil Chamber, 25 October 2005, No. 02-13.252

M.X…

vs.

OMENEX

FRENCH REPUBLIC
IN THE NAME OF THE FRENCH PEOPLE

THE COURT OF CASSATION, FIRST CIVIL CHAMBER, renders the following judgment:

According to the challenged judgment (Paris, 17 January 2002), Mr. X… sought compensation from Omenex (the company) for the harm caused to him by the breach of his contract by mentioning an arbitration clause included in his commercial agency contract dated 25 March 1998. Throughout a first arbitral award dated 7 February 2000, the arbitral tribunal declared that it had jurisdiction and rejected the request for a stay of proceedings made by Omenex, following the criminal complaint for forgery and fraud that it filed in France on 2 December 1999. As the arbitral proceedings were continuing, the company informed the arbitrators on 26 September 2000, day of the hearing, of the witness statement of Mr. Y…, the company’s director, dated 25 September 2000, stating that the contract had been backdated. By way of a second award dated 15 November 2000, Omenex was ordered to pay Mr. X… various sums. On 26 February 2001, the company had, once more, filed a complaint on the basis of the testimony of Mr. Y…

Pursuant to an appeal of Omenex, the Court of Appeal, after having qualified the arbitration as an international arbitration, rejected the company’s requests for a stay of proceedings and for the annulment of the awards.

On the first ground, taken in its two parts, and on the third ground, taken in its first part:

Omenex alleges that the judgment rejected its main request for a stay of proceedings and its appeals for the annulment of the award:

1 / In violation of Article 455 of the new Code of Civil Procedure, for not having sought to establish whether the arbitral tribunal was obliged to grant a request for a stay of the proceedings on the basis of the new facts brought to its knowledge and whether the witness statement of Mr. X… did not render the existence of the contract itself questionable.

2 / In violation of Article 1502-5 of the New Code of Civil Procedure, for not having sought to determine whether the award was contrary to international public policy, given that the arbitral tribunal was under an obligation to stay the proceedings.

However, if with regards to international arbitration, the rule “le criminel tient le civil en l’état” (meaning criminal cases cause the civil proceedings to be halted) is not binding on arbitrators, Article 4 of the Code of Criminal Procedure is applicable, even in international matters, to an action for annulment of an arbitral award if the criminal proceedings take place in France. An application for a stay of proceedings may only be granted if the facts denounced as constituting the breach have a direct impact on the cause for annulment of the award and if the criminal decision to be taken is likely to influence the civil decision.

Firstly, the arbitral tribunal, seized for an international arbitration, did not have to apply the rule “le criminel tient le civil en l’état”. Secondly, having discretionally noted that the witness statement of Mr. Y… did not call into question the existence of the contract but only its date, then that the company had not raised before the arbitrators, on the basis of this witness statement, the nullity or non-existence of the arbitration clause, although it could have done so, the court of appeal could only deduce that there was no reason to stay the proceedings, because the criminal proceedings, which were initiated by the company more than three months after the final award, did not have a direct impact on the causes of the action for annulment.

The ground is thus unfounded.

On the second ground, taken in its four parts, and on the third ground, taken in its second part:

Omenex also challenges the decision for having dismissed its actions for annulment, on the grounds that the witness statement of Mr. Y… did not call into question the existence of the contract and, therefore, of the arbitration clause, but only its date of signature, then, according to the ground:

1 / It raised the non-existence of this contract and argued that the incorrect date was a substantial element of it, so that in so ruling, the Court of Appeal violated the provisions of Article 1502 of the new Code of Civil Procedure.

2 / By refusing to verify whether the award was not contrary to international public policy, given that Article L. 134-4 of the Commercial Code and the EEC Directive of 18 December 1986 on the obligation of loyalty and information incumbent on the commercial agent was a rule of international public policy which is binding on the arbitral tribunal, the Court of Appeal violated article 1502-4 of the new Code of Civil Procedure.

However, firstly, in application of the principle of the validity of the arbitration clause and its autonomy in international matters, neither the nullity nor the non-existence of the contract containing affects it. Having first noted that no fraud was established in the signing of the minutes of the constitution of the arbitral tribunal, even though Omenex was represented by Mr. Y… who was the author of the witness statement of 25 September 2000, which results in the fact that he was aware of the inaccuracy affecting the date of the contract. Moreover, the company did not invoke the nullity or non-existence of the arbitration clause before the arbitral tribunal, even though it could have done so, the court of appeal, on these grounds alone, legally justified its decision to dismiss the ground based on the absence of an arbitration clause.

Secondly, under the guise of a violation of international public policy which is unfounded in this case, the third ground, as the Court of Appeal rightly pointed out, only seeks a review of the merits of the award, which the judge of the annulment is prohibited from doing. The grounds cannot be upheld.

FOR THESE REASONS:

DISMISSES the appeal;

Orders Omenex to pay the costs;

Pursuant to Article 700 of the new Code of Civil Procedure, rejects the request of Mr. X…;

Thus done and judged by the Court of Cassation, First Civil Chamber, and pronounced by the president during his public hearing held on twenty-five October two thousand and five.