Paris Court of Appeal, No. 07/18878 | Rory Wheeler, avocat (Paris) & solicitor (England)

Paris Court of Appeal, 18 December 2008, No. 07/18878

BRATEX vs. DANE Industries Inc.

On 5 October 2005, BRATEX, a French company, and DANE Industries, now called DANE Technologies Inc. a company incorporated under the laws of the State of Minnesota, concluded an international distribution agreement for the sale of trolleys used in supermarkets. This agreement remains “in force until 1 January 2006” and is renewable “on the basis of an amicable written agreement between the parties”.

A dispute arose between the parties because DANE Technologies Inc. decided to terminate the contract on 1 January 2006.

In application of this contract, in which an arbitration clause is inserted in article 13.2, DANE Technologies Inc. referred the matter to the New York Arbitration Commission, which appointed Mr. Y Z as arbitrator.

According to the award of 18 May 2007, the sole arbitrator:

ordered BRATEX to pay DANE Technologies Inc. the sums of US$ 94,620.98 in settlement of outstanding invoices relating to sold goods, US$ 30,955.25 in legal fees and US$ 1,926.39 in expenses and fees paid to the International Dispute Resolution Centre,
declared the non-renewal of the agreement by the company DANE Technologies Inc. legal and stated that the company BRATEX is not entitled to any compensation due to the non-renewal of the agreement,
prohibited BRATEX, its officers, directors, agents and employees from taking any action that has the effect of disrupting the distribution and sale of DANE Technologies Inc. products; and from forming any claim against current distributors of DANE Technologies Inc. for compensation arising from their distributor relationships with BRATEX.

On 17 September 2007, the President of the Paris Tribunal de Grande Instance issued an order for the enforcement of the arbitral award.

BRATEX appealed against the enforcement order (in French Ordonnance d’exequatur) and requested the Court to declare the arbitral award unenforceable and, in the alternative and on the merits, to set it aside on the grounds that the arbitrator ruled without an arbitration agreement (Article 1502-1 of the Code of Civil Procedure) and that the recognition or enforcement of the award is contrary to international public order (Article 1502-5 of the Code of Civil Procedure). It requests the court, after setting aside the award, to order the parties to discuss on the quantum of the financial loss it has suffered because of the breakdown of the business relationship and to order DANE Technologies Inc. to pay the sum of EUR 5,000 under article 700 of the code of civil procedure.

DANE Technologies Inc. considers that the appeal, along with all the claims of BRATEX should be dismissed. It requests the condemnation BRATEX company to pay it the sums of EUR 10,000 in damages for abusive proceedings, and EUR 10,000 on the basis of Article 700 of the Code of Civil Procedure.

UPON WHICH :

On the first ground for annulment based on the fact that the arbitrator ruled without an arbitration agreement (Article 1502-1 of the Code of Civil Procedure)

BRATEX argues that “the American Arbitration Association did not have jurisidiction to hear disputes between the parties, because the relationship between them was no longer governed by the contract concluded on 5 October 2005”, as the claims of DANE Technologies Inc. were based on facts subsequent to the termination on 1 January 2006. It therefore argues that the arbitrator ruled without an arbitration agreement because of the termination of the distribution contract, which was the only document that provided for recourse to the arbitration board.

The arbitration clause presents, in relation to the main agreement in which it is inserted, a legal autonomy which excludes that it can be affected by a possible ineffectiveness of this act.

In this case, article 13.2 of the international distribution contract concluded between BRATEX and DANE Technologies Inc. stipulates that “any dispute, controversy or claim resulting from or relating to this contract … shall be settled by final and binding arbitration to be administered by the Centre for Dispute Resolution in New York in accordance with the International Arbitration Rules of the American Arbitration Association”. The claims of DANE Technologies Inc. concerned the settlement of unpaid invoices issued by it for replacement parts, and its damages resulting from the actions of BRATEX, which it considered to be at fault on the grounds that the latter threatened it with commercial reprisals in the event of non-payment of compensation for contractual termination; that these claims therefore relate to the distribution contract, the termination of which does not affect the validity of the arbitration clause. Consequently, the first ground based on the absence of an arbitration agreement is rejected.

On the second ground of annulment based on the fact that the recognition or enforcement of the award is contrary to international public order (Article 1502-5 of the Code of Civil Procedure)

BRATEX argues that “a national court must grant a request for annulment of an arbitration award if it opposes a national rule of public order”, that French and European legislation, and in particular Articles 81 and 82 of the Treaty of Rome, protect the French and European markets from anti-competitive practices and abuses of dominant position and that the “award must be set aside because it does not comply with French and European law”.

BRATEX, which does not prove or even allege any flagrant, effective and concrete violation of international public order, does not show how the enforcement of the award would violate this international public order within the meaning of Article 1502-5 of the Code of Civil Procedure. The second ground for annulment and therefore the appeal against the exequatur order are rejected.

On the claim for damages and Article 700 of the Code of Civil Procedure

Considering that DANE Technologies Inc. does not establish any particular circumstances that would degenerate the right of appeal of the company BRATEX into abuse, its claim for damages is dismissed.

That BRATEX should be ordered to pay DANE Technologies Inc. the sum of EUR 10,000 under Article 700 of the Code of Civil Procedure;

FOR THESE REASONS :

CONFIRMS the enforcement order of the award,

DISMISSES DANE Technologies Inc.’s claim for damages,

ORDERS BRATEX to pay DANE Technologies Inc. the sum of EUR 10,000 pursuant to Article 700 of the Code of Civil Procedure,

ORDERS the company BRATEX to pay the costs and admits the SCP DUBOSCQ&PELLERIN, avowed, to the benefit of article 699 of the code of civil procedure.

THE CLERK, THE PRESIDENT