Court of Cassation, No. 03-19.764

Court of Cassation, First Civil Chamber, 14 March 2006, No. 03-19.764

Challenged decision: Paris Court of Appeal, 18 September 2003

Consehlo Nacional de Carregadores (CNC)

Vs..

Mr. X…

CNCA-CEC

TESLEA

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

Whereas the Consehlo Nacional de Carregadores (CNC), which on 1 of January 2000 entered into a contract with Mr. X… to manage a worldwide network of agents in seaports for the issuance of certificates of shipment of all goods destined for Angola through a company created for this purpose, the company CNCA-CEC. CNC terminated this agreement after difficulties concerning the replacement and appointment of certain agents; that Mr. X… and the company CNCA-CEC then filed a request for arbitration on the basis of the arbitration clause in the contract; that a dispute arose as to the determination of the parties to the arbitration and the arbitral tribunal made a preliminary award on 18 September 2003; that the CNC filed an action for annulment against this award;

On the first ground:

Whereas the judgment under appeal (Paris, 18 September 2003) is challenged for having declared the forced intervention of Telsea Holding inadmissible and dismissed the action for annulment in violation of article 455 of the new Civil Procedure Code by failing to examine, as requested, whether this company did not necessarily have the status of party to the arbitration by its direct involvement in the performance of the contract;

But whereas, when referred on an appeal for annulment, the Court of Appeal did not have the power to judge, as requested by the CNC, that Telsea Holding, summoned to intervene, became a party to the arbitration; that the CNC could have brought this claim before the Court of Appeal only by reproaching the arbitral tribunal for having disregarded article 1502-1 of the new Civil Procedure Code by refusing to extend the effect of the arbitration clause to a party involved in the performance of the contract; that the ground is unfounded;

But on the second ground taken in its first two parts :

Based on articles 1502-4 and 1504 of the new Civil Procedure Code, together with article 16 of the same Code;

Whereas, although the arbitral tribunal is not obliged to submit the legal arguments supporting its reasoning to the parties for discussion beforehand, it has nevertheless to respect due process (in French Principe de la contradiction);

Whereas, in order to reject the ground for annulment based on the violation of due process (in French Principe de la contradiction), the judgment holds that the arbitrators reasoned their award in law by applying their reasoning to the elements of fact and law debated by the parties and that they deduced the legal consequences that they considered well-founded;

That in so ruling when the arbitral tribunal, without adversarial debate, based its decision on the non-invoked provisions of article 1843 of the Civil Code, the Court of Appeal violated the aforementioned texts;

FOR THESE REASONS, and without the necessity to rule on the other grievances:

REVERSES AND ANNULS, in its entirety, the judgement handed down on 18 September 2003 between the parties by the Paris Court of Appeal; return, consequently, the proceedings and the parties to their status quo ante and, for the proceedings to be determined in accordance with the law, transmit them to the Court of Appeal of Orléans.

Orders Mr. X… and the companies CENTRE EXTÉRIEUR DE COORDINATION and TELSEA HOLDING to pay the costs.

Pursuant to article 700 of the new Civil Procedure Code, rejects the requests;

States that on the steps of the public prosecutor at the Court of Cassation, the present decision will be transmitted to be transcribed in the margin or following the reversed decision;

Thus made and judged by the Court of Cassation, First Civil Chamber, and pronounced by the president in his public hearing of 14 March 2006.