Paris Court of Appeal, No. 04/21652 | Rory Wheeler, avocat (Paris) & solicitor (England)

Paris Court of Appeal, 15 June 2006, No. 04/21652

REPUBLIC OF DJIBOUTI

vs.

COTECNA INSPECTION S.A

The Government of the Republic of Djibouti filed on 12 November 2004 an action for annulment of Arbitral Award 10157/AC/DB made under the supervision of the International Chamber of Commerce (‘ICC’) in Paris on 28 January 2000 by Mr. X, a sole arbitrator who :

1. States that the present dispute shall be settled by arbitration, the arbitration agreement shall be valid and, accordingly, he shall declare that he has jurisdiction;
1. In substance of the case, orders the Republic of Djibouti to pay Cotecna the sum of two million two hundred and sixty-five thousand five hundred and fifty-five decimal sixty-three dollars (US$ 2,265,550.63) with interest at the legal rate in force in Djibouti from the date of the present award;
1. Dismisses the parties from all other or contrary claims or submissions,
1. Orders the Republic of Djibouti to reimburse to Cotecna three quarters of the arbitration costs including the arbitrator’s fees and expenses, together liquidated and fixed by the International Court of Arbitration at the sum of US$88,000 (i.e. to be reimbursed, the sum of sixty-six thousand dollars (US$66,000).
1. States that there is no reason to grant the parties any compensation for other costs incurred in their defence'.

The Government of the Republic of Djibouti claimed that the award should be set aside because the dispute was not arbitrable, and because there is contradiction between the grounds and the operative part, and ultra petita concerning the interest awarded. It requests that Cotecna Inspection be ordered to pay the costs and to pay the sum of 30,000 euros under Article 700 of the new Code of Civil Procedure.

The Swiss company Cotecna Inspection considered that the appeal was inadmissible and requested that the appeal be dismissed and requested that the government of the Republic of Djibouti be ordered to pay it the sum of 20,000 euros in damages for abusive proceedings, 30,000 euros under Article 700 of the new Code of Civil Procedure and to bear the costs.

UPON WHICH :

On the inadmissibility of the action for annulment :

Whereas Cotecna Inspection raises the inadmissibility of the Government of the Republic of Djibouti’s action for annulment because the period of one month increased by the two-month time limit for distance running from 7 April 2004, the date of notification to the public prosecutor’s office of the award granted exequatur, and not from 16 September 2004, the date of reception of the document by its beneficiary;

Whereas the time limit for appeal runs from the day the bailiff delivers the document to the public prosecutor’s office of the French court, it does not matter the date of its effective reception by the beneficiary, under provisions of its regular notification. No indication as to whether notification was made under Article 684 of the new Code of Civil Procedure rather than under Article 688 of the same Code concerning documents addressed to a foreign State, the provisions of which apply only in the absence of a different international treaty; IT should be stated that the time limit provided for in Article 1505 of the new Code of Civil Procedure ran from the day the beneficiary received the document. In the absence of evidence provided by Cotecna Inspection that the service was regularly notified in accordance with the above-mentioned articles, the objection of inadmissibility is dismissed;

On the annulment of the award :

The Government of the Republic of Djibouti claims that the dispute was not arbitrable because the arbitration clause in the contract concluded with the company Cotecna Inspection on providing inspection services and verification to set up a system of imports to Djibouti was governed, like the contract because of the choice of law made by the parties, by French law, which prohibits arbitration for international contracts involving the delegation of a public customs service and exorbitant clauses of general law. It was therefore an administrative contract.

The Government of the Republic of Djibouti objects to the decision of the sole arbitrator who retained for default interest the legal rate in the Republic of Djibouti whereas he asked for the legal rate of French interest, and that moreover, the arbitrator was mistaken in the rate between the grounds and the operative part. The claimant deduced that the arbitrator exceeded his mission and added that Cotecna Inspection claimed interest on the basis of the award at a rate higher than that granted by the arbitrator.

Whereas by virtue of the principle of validity of the international arbitration agreement, without any condition of the administrative or other nature of the disputed contract, no violation of international public policy in the arbitration clause has been demonstrated by the Government of the Republic of Djibouti, in particular for the non-arbitrability of the dispute ;

Whereas the mission of the arbitrator, as defined by the arbitration agreement, is delimited mainly by the subject matter of the dispute, as determined by the parties' claims. Whereas it is common ground, as can be deduced in particular from the Terms of Reference established on 9 February 1999, that the company Cotecna Inspection requested that the Government of the Republic of Djibouti be ordered to pay interest on the rate at which the parties were opposed. The sole arbitrator therefore did not rule beyond what was requested of him, that the rate retained in the award displeasing to the claimant, because it is higher than the one ir pleaded in favour of, is an indifferent circumstance for the annulment of the award. The judge is never able to hear the merits of the dispute in the context of a review under Article 1502 of the New Code of Civil Procedure, which prevents particularly an review of the grounds for contradiction, while the Government of the Republic of Djibouti does not, moreover, demonstrate the existence of contradictory decisions by the arbitrator;

Whereas the Government of the Republic of Djibouti failed to establish the reality of any of the grounds provided for exhaustively in Article 1502, its action for annulment is dismissed;

On damages for abusive proceedings, Article 700 of the new Code of Civil Procedure and costs:

Whereas Cotecna Inspection failed to provide evidence that the Government of the Republic of Djibouti’s action, if ill-founded, was moreover abusive, its claim for damages was rejected;

Whereas the Government of the Republic of Djibouti, which was ordered to pay the costs, paid Cotecna Inspection the sum of 30,000 euros on the basis of Article 700 of the new Code of Civil Procedure, without being able to claim any compensation in this regard;

FOR THESE REASONS:

Declares admissible the action for annulment against Award CCI 10157/AC/DB of 28 January 2000,

Dismisses it,

Orders the Government of the Republic of Djibouti to pay the company Cotecna Inspection the sum of 30,000 euros in application of Article 700 of the new Code of Civil Procedure,

Dismisses all other claims of the parties,

Orders the Government of the Republic of Djibouti to pay the costs and grants SCP Guizard, avowed, the right provided for in Article 699 of the new Code of Civil Procedure.