Paris Court of Appeal, No. 07/10356 | Rory Wheeler, avocat (Paris) & solicitor (England)

Paris Court of Appeal, 25 September 2008, No. 07/10356

Challenged decision: ICC No. 11975 Upheld by: Court of Cassation, First Civil Chamber, 6 October 2010, No. 08-20.563

JOSEPH ABELA FAMILY FOUNDATION vs. ALBERT ABELA FAMILY FOUNDATION And others

On 1 May 1979, Edwin, Albert, and Joseph Abela signed a protocol providing for the establishment of a holding company in Liechtenstein to combine their activities. Article 4 of the agreement provides that the intention of each party was to allocate their shares in the holding company to a family foundation, but without this being an obligation.

The articles of association of the holding company named ALBERT ABELA CORPORATION were signed by the three brothers on 5 September 1979. Article 31 stipulated an arbitration clause stipulating that any dispute that might arise during the activity or liquidation period of the company between the shareholders and the company or between the shareholders themselves, linked in any way whatsoever to the interpretation or implementation of the charter of incorporation or the articles of association, or to the acts or resolutions of the company’s bodies or to the company’s activity, will, in the absence of an amiable resolution, be submitted to three arbitrators in accordance with the rules of the International Chamber of Commerce in Paris.

Joseph and Albert Abela each established a family foundation, JOSEPH ABELA FAMILY FOUNDATION and ALBERT ABELA FAMILY FOUNDATION.

Edwin Abela having sold its shares to the family foundations of its brothers, the shareholding of the holding company was composed of JOSEPH ABELA FAMILY FOUNDATION and ALBERT ABELA FAMILY FOUNDATION respectively up to 15% and 85%, the companies ROUNDHILL TRUST and ROSEHILL FOUNDATION being each holder of one share.

In 1996 Albert Abela appointed his sons Albert Martin and Marlon Abela “executive vice presidents”, each responsible for overseeing half of the group’s activities worldwide.

Albert Abela died on XXX and serious dissensions opposed his two sons and their mother Bärbel Abela. After various procedures, they signed on 26 April 2000 a “settlement agreement” which was also signed on the same day by ALBERT ABELA FAMILY FOUNDATION. The agreement providing for the sale of the assets, approved by the company’s board of directors, was submitted to the shareholders' meeting, which ratified it despite the opposition of Joseph Abela and JOSEPH ABELA FAMILY FOUNDATION.

In these circumstances, JOSEPH ABELA FAMILY FOUNDATION filed a request for arbitration against ALBERT ABELA FAMILY FOUNDATION, ALBERT ABELA CORPORATION, ROUNDHILL TRUST, ROSEHILL FOUNDATION and against Bärbel, Marlon and Albert Martin Abela seeking the annulment of various resolutions of the shareholders' meetings, in particular relating to the settlement agreement, and to obtain damages.

A first partial award rendered on 25 April 2005, by Mr. B C, Chairman, and Messrs. X and K J M, arbitrators, declared that the law applicable to the arbitration agreement is French law, that the law applicable to the merits is the law of Liechtenstein, that the arbitration agreement is valid and that the subject-matter of the dispute is subject to arbitration.

A second partial award of 22 June 2006 (set aside by decision of this court of 22 May 2008) decided that the Third, Fourth and Fifth Defendants [Bärbel, Marlon and Albert Martin Abela] are not bound by the Arbitration Agreement and that all other decisions, including those concerning the costs in relation to the Third, Fourth and Fifth Defendants, are reserved for future awards.

By a third partial award of 14 February 2007 against which the JOSEPH ABELA FAMILY FOUNDATION files the current action for annulment the arbitral tribunal stated:

All requests for annulment of the deliberations of the company SAA dated on 30 May 2000, 30 November 2001 and 9 May 2003 are declared time-barred by application of article 179 of the RMP.
All other requests for the annulment of all decisions or resolutions taken or adopted subsequently are rejected.
The Tribunal reserves all other decisions, including any decision regarding costs, for a later award.

In support of its action for annulment, which it bases on the conflict of the award with international public policy (Article 1502-5 of the Code of Civil Procedure or CCP), the JOSEPH ABELA FAMILY FOUNDATION argues that this decision constitutes an excessive limitation of access to the judge by declaring its requests to be time-barred, equivalent to a refusal of access to a tribunal.

It thus requests the Court to set aside the award and to order the defendants to pay it 50.000€ by application of article 700 of the CCP.

ALBERT ABELA FAMILY FOUNDATION, ALBERT ABELA CORPORATION, ROUNDHILL TRUST, ROSEHILL FOUNDATION, Bärbel, Marlon and Albert Martin Abela request the Court to dismiss this action and to order JOSEPH ABELA FAMILY FOUNDATION to pay them €80,000 under Article 700 of the CCP.

UPON WHICH:

On the sole ground for annulment based on the violation of international public policy (Article 1502-5 of the Code of Civil Procedure):

JOSEPH ABELA FAMILY FOUNDATION, reminding that the right of access to a court which is a matter of international public policy presupposes that the modalities of exercising a remedy, mainly with regard to the calculation of the time limits to be observed, allow the effectiveness of the access to the court provided for in Article 6 of the ECHR. JOSEPH ABELA FAMILY FOUNDATION stated that in the present case the court could not declare time-barred its actions for the annulment of various resolutions of the general meetings of Albert Abela because it would not notify Albert Abela of its intention to act within one month and file a reasoned request with the arbitral tribunal within one month, as provided for in article 179 PGR of the Liechtenstein law, whereas it could not usefully do so because it did not have access to the minutes of the general meetings, which were only made available to it during the course of the arbitration at the request of the arbitral tribunal.

However, considering that the infringement of international public policy must constitute a manifest violation of a rule of law, considered essential or of a fundamental principle, and must be flagrant, effective and concrete; that, in the present case, the arbitrators applying the law of Liechtenstein to which the parties refer found that the applications for annulment were time-barred since the time limits of one month plus one month beginning to run from the adoption of the resolutions. Indeed, JOSEPH ABELA FAMILY FOUNDATION had or might have had knowledge of this because it attended to general meetings of 30 May 2000 and 9 May 2003 and had knowledge of the minutes of the general meeting on 14 December 2001;

Thus, the claimant, who does not explain how the decision of the arbitral tribunal would violate article 6 of the ECHR and would flagrantly, effectively and concretely violate international public policy, is in fact inviting the Court to review the merits of the arbitral award, which is prohibited to the judge making the annulment;

That the ground and hence the action are dismissed;

Considering that in application of article 700 of the CCP, it is equitable to order JOSEPH ABELA FAMILY FOUNDATION, whose request in this regard is rejected, to pay to the defendants the global sum of EUR 50.000;

FOR THESE REASONS:

REJECTS the appeal against the partial award No. 3 of 14 February 2007 rendered by the arbitral tribunal composed of Mr. B C, chairman, and Messrs. X and K J M, arbitrators;

ORDERS JOSEPH ABELA FAMILY FOUNDATION to pay to ALBERT ABELA FAMILY FOUNDATION, ALBERT ABELA CORPORATION, ROUNDHILL TRUST, ROSEHILL FOUNDATION, Bärbel, Marlon and Albert Martin Abela the global sum of EUR 50.000 under Article 700 of the CCP;

ORDERS JOSEPH ABELA FAMILY FOUNDATION to bear the costs and admits CPA Duboscq and Pellerin, avowed, for the benefit of article 699 of the CCP.