Paris Court of Appeal, No. 08/12816

Paris Court of Appeal, 5 November 2009, No. 08/12816

RIVERSTONE INSURANCE (UK) Ltd vs. Mr. Y (in his capacity as liquidator of COMPAGNIE INTERNATIONALE DE CAUTION POUR LE DÉVELOPPEMENT)

The company RIVERSTONE INSURANCE (UK) Ltd (RIVERSTONE) guaranteed the COMPAGNIE INTERNATIONALE DE CAUTION POUR LE DÉVELOPPEMENT (ICD), under reinsurance agreements, for its bonding activity for which it had obtained the approval of the Minister of the Economy.

The withdrawal of this approval by the Insurance Control Commission led to its liquidation and the appointment of Mr. Y as its liquidator.

Difficulties having arisen in relation to the reinsurance accounts, ICD, represented by its liquidator, introduced arbitration proceedings for each agreement, all of which included an arbitration clause.

In an award rendered in Paris on 29 April 2008, the arbitral tribunal, composed of C D, Chairman, and of A B and E F, arbitrators, ruling as amiable compositor, drew up the accounts and determined (tables on pages 13 and 14 of the award) for each of the disputed agreements the amount to be paid by the reinsurer in respect of the claims admitted definitively or provisionally.

After receiving an application “to supplement the award of 29 April 2008”, the arbitral tribunal, in an award dated 20 November 2008, declared the application admissible, rejected the request for provisional enforcement and interpreted articles 10 and 11 of the main award (claims admitted definitively and provisionally).

On 27 June 2008, RIVERSTONE filed an action for annulment against the award of 29 April 2008 (RG 08/12816) on the grounds that the arbitrators did not comply with the mission conferred upon them (Article 1502-3 of the Code of Civil Procedure) in that they joined the arbitration proceedings and disregarded the economics of reinsurance treaties and that recognition or enforcement is contrary to international public policy (Article 1502-5 of the Code of Civil Procedure).

It requests the court, under Articles 1502 and 1504 of the Code of Civil Procedure and 1134 of the Civil Code, to annul the award, to reject the claim for damages for abusive proceedings brought by Mr. Y and to order him to pay it EUR 5,000 by application of article 700 of the CPC.

On 16 December 2008, RIVERSTONE filed an action for annulment against the award of 20 November 2008 (RG 08/23600) based on identical grounds (failure to comply with the terms of reference due to the violation of reinsurance agreements and consequent violation of international public policy) and submitted to the court the same applications for annulment of the award and conviction of Mr. Y to pay EUR 5,000 under Article 700 of the Code of Civil Procedure.

SCP Y & K-Y, in the person of Mr. Y, in his capacity as judicial representative in the judicial liquidation of ICD, asks the court to declare inadmissible under the rule of estoppel the ground alleging non-compliance with the mission due to the joinder of the proceedings, and for each of the proceedings to reject the appeals and to order RIVERSTONE to pay EUR 100,000 in damages for abusive proceedings and EUR 15,000 under article 700 of the Code of Civil Procedure.

UPON WHICH:

Considering that the related appeals are attached;

On the first ground for annulment: the arbitral tribunal did not comply with the mission conferred upon it (article 1502-3 of the Code of Civil Procedure):

RIVERSTONE argues, under the award of 29 April 2008, that a separate arbitration proceeding had been initiated by ICD for each of the disputed reinsurance agreements and that they should have been answered by separate awards, the arbitrators having to rule as amiable compositors for some agreements, and in law for others. It points out that the award of 29 April 2008 does not specify whether it was ruled in equity or in law, except for the reconstitution of the 2000 accounts established in equity, in such a way that either the arbitrators ruled as amiable compositors, thus violating the arbitration clauses not authorizing them to do so, or did not rule as amiable compositors, thus violating the arbitration clauses inviting them to do so.

It alleges that the rule of estoppel cannot be opposed to it since ICD introduced each arbitration proceeding separately and filed separate briefs, that the parties maintained throughout the procedure the distinction between each of the proceedings, and that in reality, the fact that RIVERSTONE consolidated its arguments in a single brief was to facilitate the work of the arbitrators who, as stated in the minutes of the arbitration hearing of 20 December 2007, invited the parties to combine the common arguments of principle while presenting separately the particularities of certain contracts “without prejudice to the separation of the arbitration proceedings”; that moreover, the arbitrators calculated their fees on the basis of the arbitration proceedings initiated for each agreement. Finally, it states that it opposed the request for joinder filed by ICD in its last brief.

It also criticizes the arbitrators, with regard to both the award of 29 April and that of 20 November 2008, for having changed the economics of the treaties and for having rendered an unfair decision charging it with sums exceeding what it owed contractually.

However, considering that RIVERSTONE spontaneously submitted defense pleadings that were common to all the agreements and did not provide proof that it had “strongly opposed”, at the hearing of 9 April 2008, the request made by ICD in its summary brief of 31 March 2008 for the joinder of all the proceedings concerning the same reinsurer, that having thus failed to establish that it had protested, it can no longer, by virtue of the rule of estoppel, raise, in the context of the annulment proceedings, the ground alleging that the arbitrators disregarded their mission in that they proceeded to consolidate; that it should also be noted that whenever it is possible, a claim under article 1502 of the Code of Civil Procedure must be raised before the arbitral tribunal, that RIVERSTONE had every opportunity, before and after the hearing, to develop a written argument against the application for consolidation, which it did not do

Moreover, the arbitral tribunal has individualized the amounts withheld for each of the agreements, and thereby, has not disregarded its mission.

Considering, however, that if it results from the terms of the award of 29 April 2008 (page 12) that the arbitral tribunal did indeed rule as an amiable compositor as required by the arbitration clauses of the treaties 20070/20085, 20082, XXX, XXX, the same award includes the 20111 agreement; whereas the arbitration clause it contains does not provide that it will be ruled in equity, that in so doing the arbitrators have not respected their mission with regard to this treaty, and the award deserves annulment but only insofar it made a ruling on the 20111 agreement;

Considering finally that the branch of the ground, concerning both the award of 29 April 2008 and the award of 20 November 2008, and relating to a violation of reinsurance treaties, invites the court to review the substance of the award, which the annulment judge is prohibited from doing, thus it can only be rejected.

On the second ground for annulment: the arbitral tribunal violated international public order (article 1502-5 of the Code of Civil Procedure):

RIVERSTONE claims that the arbitral tribunal violated the reinsurance agreements, and disregarded the mechanism for calculating the reinsurance indemnity, and thus violated the fundamental principle laid down in Article 1134 of the Civil Code, and hence also violated international public order.

However, considering that by doing so, RIVERSTONE, which does not demonstrate how the solution adopted by the arbitrators flagrantly, effectively and concretely violates international public order, once again invites the court to review the merits of the awards, which the annulment judge is prohibited from doing;

That the ground is rejected;

On the claim for damages for abusive procedure:

Considering that Mr. Y does not establish that RIVERSTONE has filed its appeals, which are partially upheld, by malice, intention to harm or error equivalent to fraud;

That his application is dismissed;

On the applications under Article 700 of the Code of Civil Procedure:

Considering that equity does not require that these requests be granted;

ON THESE GROUNDS:

JOINS the appeals entered in the General List under numbers 08/12816 and 08/23600;

ANNULS the sentence of 29 April 2008 with regard to its ruling on the reinsurance agreement 20111;

REJECTS the actions for annulment of the remainder;

REJECTS any other application;

CONDEMNS RIVERSTONE INSURANCE (UK) Ltd to pay the costs, and admits SCP I J to the benefit of Article 699 of the CPC.

THE CLERK, THE PRESIDENT