Paris Court of Appeal, No. 06/20694

Paris Court of Appeal, 18 September 2008, No. 06/20694

Mrs Z A

vs.

Me B C

On 29 November 2006, Mrs Z A filed an action for annulment against an ICC arbitral award 13262/DK, rendered in Paris on 24 May 2006 under the supervision of the International Chamber of Commerce (‘ICC’) by Mr X, sole arbitrator, who declared that he had jurisdiction, rejected the objection of inadmissibility to decide on competence, but stayed the proceedings with respect to the decision on the merits of the case for a period of six months as of the date of this award, except in the case where the criminal investigations underway in Lebanon and France would be completed before the expiration of this period. In such case, the arbitral proceedings would resume as of the notification of the end of the criminal investigations. Finally, the arbitrator reserved all other questions.

First, Mrs Z A requests a stay of proceedings to await the outcome of the French and Lebanese criminal proceedings. Alternatively, in support of her appeal, Mrs Z A raises two grounds for annulment, the absence or the annulment of the agreement arbitration (article 1502-1° of the CPC), the violation of the international public order (article 1502-5° of the CPC). Finally, she requests the condemnation of Me B C to pay the costs and to pay her a sum of €50,000 pursuant to Article 700 of the Code of Civil Procedure.

Me B C, legal representative of the claimant’s father, L G A, for the management of his property until his death, submitted the dismissal of the appeal, the conviction of Mrs Z A to pay him a sum of €100,000 as damages for abusive proceedings, a sum of 50.000 € pursuant to Article 700 of the Code of Civil Procedure and to bear the costs.

UPON WHICH:

Whereas, Mrs Z A requests a stay of proceedings on her own appeal because the facts referred to in the complaints that she filed in Lebanon and France, which relate to the disputed agreement and constitute forgery and use thereof, have a direct impact on the cause of the annulment of the award, since these facts are the same as those that she is invoking alternatively in support of her appeal.

Mrs Z A filed a complaint with the examining magistrate of Beirut on 25 March 2004 for breach of trust, fraud and use of forgery against her attorney Me D E, accusing him of having entered into an agreement, without her consent, in order to discontinue the legal proceedings against Me B C concerning his rendering of accounts towards the heirs of L G A and to resolve the dispute by arbitration. Moreover, on 28 May 2004, Mrs Z A filed a complaint against X before the examining magistrate (in French : juge de l’instruction) of the Paris Court of First Instance for use of forgeries and attempted fraud on the grounds that the request for arbitration submitted to the ICC is based on the arbitration clause of an agreement that does not bind her.

Whereas, under the provisions of Article 4 of the Code of Criminal Procedure, the setting in motion of the public action does not impose the suspension of the other actions of whatever nature, raised before the civil court, even if the criminal decision to be taken is likely to influence, directly or indirectly, the outcome of the civil trial. The claim for a stay of proceedings filed by Mrs Z A is dismissed with respect to the criminal procedure pending in France and, a fortiori, with respect to the Lebanese criminal procedure, the French judge having no obligation to comply with the outcome thereof.

On the first ground for annulment for absence or annulment of the arbitration agreement (Article 1502-1 of the Code of Civil Procedure, now Article 1520-1):

Mrs Z A explained that the principle of the autonomy of the arbitration clause finds its limit in the non-existence, particularly in the form, of the main agreement signed on 1 June 2007, to which the claimant never gave her consent, and even less so, to the agreement of 20 June or 20 August 2003, which constitutes a forgery.

Mrs Z A added that the sole arbitrator wrongly declared that he had jurisdiction on the basis of the appearance of the acts instead of looking for the existence of her consent.

She thus states that her attorney, Me D F, and Me B C had a misunderstanding with respect to the date of the agreement of 20 June or 20 August 2003; that this agreement was never registered and that certain important documents were not annexed, and that Me Akkaoui, the claimant’s lawyer, was not associated with the signing of the agreement of 20 June or 20 August, that the agreement is extremely inaccurate with regard to the inventory and the rendering of accounts; that it provides for a full, general and final discharge in favour of Me B C: that the agreement also governs the fate of a third person, the Risling Foundation, which is granted a discharge of all rights or claims; that Me D E exceeded his powers and that Me B C concealed the agreement.

Finally, Mrs Z A states that the agreement of June 20 or 20 August 2003 is null and void for lack of power of Me D E and fraudulent collusion of the latter with Me B C, who knew that this agreement went against her will and refrained from justifying the powers of Me D E.

Whereas, the principle of the autonomy of the arbitration clause is not limited by the existence of the main agreement containing it, even in the form, which derives its existence and validity, not from a state law for which it is useless to look by applying the rules of private international law, but from the sole will of the parties. Thus, the sole arbitrator ascertained conscientiously, by verifying in particular that the date of the deed of 20 June 2003 containing the arbitration clause correcting the one contained in the agreement of the previous 1 June was prior to the revocation of Me D E’s power of attorney by Mrs Z A in October 2003, and concluded that she had knowledge of the existence of the agreement with its arbitration clause at the time of the revocation. Incidentally, in the context of the principle of validity of the clause, there is a principle of capacity based on good faith and which prohibits the refusal of an arbitrators' agreement to which one has agreed.

The first ground for annulment is dismissed.

On the second ground for annulment on the basis that the recognition of the award violates international public order (Article 1502-5 of the Code of Civil Procedure, now Article 1520-5):

Mrs Z A states that the sole arbitrator violated international public order on the one hand, by refusing to stay the proceedings regarding adjudication on his jurisdiction while a criminal procedure having a direct bearing on this issue was in progress. On the other hand, the sole arbitrator violated international public order by endorsing the use of a forgery in the arbitration, which is the disputed arbitration clause contained in the forgery of 20 June or 20 August 2003 in this case,. This constitutes a use of forgery potentially leading to an award which would be the final step in the fraudulent process.

Whereas, the sole arbitrator who had the duty to rule on his contested jurisdiction, barring any state court as a result of the rule of priority of arbitral competence which is recognised as one of the most essential rules of arbitration, clearly was not able to violate the fundamental principles protected by international public order. The award on jurisdiction rendered on the basis of an arbitration clause recognised as valid is not a decision vitiated by fraud and violating the substantive or procedural international public order, as added by Mrs Z A, whose ground of appeal is dismissed, in the same manner as her appeal.

Regarding the damages for abuse of process, the costs, and Article 700 of the Code of Civil Procedure:

Whereas, Me B C does not bring forth the abusive nature of the appeal, his claim for damages and interest is rejected;

Mrs Z A bears the costs and cannot therefore claim an indemnity pursuant to Article 700 of the Code of Civil Procedure, on the basis of which she pays a sum of 50.000 € to Me B C;

FOR THESE REASONS:

Dismisses the claim for a stay of proceedings,

Dismisses the appeal against ICC Award 13262/DK of 24 May 2006,

Orders Mrs Z A to pay to Me B C a sum of 50.000 € by application of article 700 of the Code of Civil Procedure,

Dismisses all other claims,

Orders Mrs Z A to pay the costs and grants SCP Monin d’Auriac de Brons, sollicitor, the benefit of the right provided in Article 699 of the Code of Civil Procedure.