Court of Cassation, No. 03-19.054 | Rory Wheeler, avocat (Paris) & solicitor (England)

Court of Cassation, First Civil Chamber, 31 January 2006, No. 03-19.054

Challenged decision: Paris Court of Appeal, 22 May 2003

INTERCAFCO

vs.

DAFCI

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

Whereas the Swiss company INTERCAFCO sent at the beginning of September 1999 to the Ivorian company DAFCI purchase confirmations relating to ten thousand tons of cocoa beans, a summary dated 15 September 1999 referring to the “AFCC general conditions No. 1”. A dispute arose on the price of the goods, and the company DAFCI, according to the arbitration clause included in these general conditions, referred a claim for payment to the Arbitration Chamber of the Cocoa Trade Federation. The company INTERCAFCO disputed the draft award and claimed the absence of an arbitration agreement. The arbitral tribunal of the second degree, by award of 14 June 2001, declared it had jurisdiction and ordered the Swiss company to payment. The company INTERCAFCO filed an action for annulment;

On the first ground, taken in its three parts;

Whereas INTERCAFCO objects to the judgment under appeal (Paris, 22 May 2003) which rejected its action for annulment thus, according to the ground:

1/ that the ground for the annulment of the award, which is based on the fact that the arbitrator ruled without an arbitration agreement or on a null or expired agreement, can be raised at any time; that by declaring this ground inadmissible in that it had not been invoked before the arbitrator, the Court of Appeal violated articles 1502 and 1504 of the new Code of Civil Procedure;

2/ by holding that, in order to declare INTERCAFCO inadmissible to invoke the ground for annulment relating to the absence of an arbitration agreement, it follows from Article 12 of the FCC Arbitration Chamber Rules that the ground that the arbitrators lacked jurisdiction must be raised before any defence on the merits, when the application of these rules presupposed that the question of the existence of the arbitration agreement, on which the application of the rules depended, the Court of Appeal again violated articles 1502 and 1504 of the new Code of Civil Procedure;

3/ that, in its submissions, INTERCAFCO argued that it resulted from the particular nature of the FCC arbitration, at two levels, that only the second award had the true value of arbitration; that the Court of Appeal itself defined the award rendered in the first level as a “draft award”; that it followed that it was in the state of the parties' writings before the second instance of the arbitral tribunal that the new nature of the arbitrator’s objection of lack of jurisdiction had to be assessed; that by leaving these writings unanswered, the Court of Appeal did not meet the requirements of article 455 of the new Code of Civil Procedure;

Whereas, however, first of all, any ground invoked against an award under article 1502 of the New Code of Civil Procedure must, in order to be admissible before the judge of annulment, have been raised, whenever possible, before the arbitral tribunal itself; that the judgment notes, then, that article 12 of the AFCC’s rules, relating to first degree arbitral proceedings, provided that in order to be admissible, the plea of lack of jurisdiction must be raised before any defense on the merits; Finally, it notes that INTERCAFCO did not raise the absence of an arbitration agreement before the arbitral tribunal at first instance; that the Court of Appeal has exactly deduced from this that INTERCAFCO was inadmissible to invoke it before the judge of annulment; that the ground is not founded in any of the parts;

On the second and third grounds:

Whereas the judgment under appeal is still challenged because it ruled in that way, when according to the ground:

1 / the award is subject to annulment when the arbitrator declared he/she has jurisdiction to hear an aspect of the dispute submitted to him/her by the parties; that the fact that, in order to assess this defect, the annulment judge must make an assessment in law and in fact does not constitute an obstacle to the admissibility of the ground; that in holding that INTERCAFCO was inadmissible to invoke the ground of annulment based on the fact that the arbitrators refused to rule on the partnership invoked, in that this ground of appeal presupposed an assessment of the merits of the dispute, the court of appeal, which erroneously pronounced itself for an erroneous reason and limited itself from investigating whether the arbitrators did not wrongly declare they had jurisdiction on this aspect of the dispute, deprived its decision of legal basis with regard to articles 1502 and 1504 of the new Code of Civil Procedure;

2 / the Court of Appeal, which merely stated that the arbitrators did not have to submit their reasoning to the parties, without investigating whether the objection of lack of jurisdiction raised on its own motion did not constitute a legal ground which should be submitted to the parties for discussion, deprived its decision of legal basis with regard to articles 16 and 1502 of the new Code of Civil Procedure;

Whereas, however, in the absence of a request to draw the legal consequences of the existence of a partnership, which would have led the arbitral tribunal to assess its jurisdiction on this ground, under the control of the domestic court, it is rightfully that the court of appeal, which noted that INTERCAFCO’s criticisms concerned the merits of the dispute, rejected the ground of annulment since the content of the reasoning of the award, which does not have to be submitted to the parties for discussion, is beyond the control of the annulment judge; that the ground cannot be upheld;

FOR THESE REASONS:

REJECTS the appeal;

Orders INTERCAFCO to the costs;

Pursuant to article 700 of the new Code of civil procedure, orders INTERCAFCO to pay to DAFCI the sum of 2.000 euros;

Thus, made and judged by the Court of Cassation, First civil chamber, and pronounced by the president in its public hearing of thirty one January two thousand and six.