Paris Court of Appeal, No. 08/14161

Paris Court of Appeal, 26 November 2009, No. 08/14161

M.Z. FILMS SARL
vs.
SOCIÉTÉ NEW FILMS INTERNATIONAL LLC

The present dispute is between MZ FILMS, a French company, and NEW FILMS INTERNATIONAL LLC, an American company, concerning the application of a “memorandum of understanding” on the distribution of films.

The NEW FILMS INTERNATIONAL LLC company filed an action on the basis of the arbitration clause contained in this agreement.

By an award rendered on 18 June 2007 in Los Angeles under the supervision of the IFTA (Independent Film and Television Alliance), the sole arbitrator, Mr. Y Q. A., stated that the Respondent (MZ FILMS) shall pay to the Claimant (NEW FILMS) € 533,500 representing the unpaid balance of the sums due to the Claimant under the terms of the distribution agreement, with interest as from 1 November 2006, the due date for these payments, at the highest contractual legal rate that may be applied under the applicable law and US$ 4,500 in costs and fees incurred in connection with this case with the same interest from the date of the award.

The MZ FILMS company appealed against the enforcement order (in French Ordonnance d’exequatur) of the President of the Paris Tribunal of Grande Instance dated 14 May 2008.

It requests the Court to overturn the enforcement order (in French Ordonnance d’exequatur), noting the absence of an arbitration agreement. It claims € 1,000 under Article 700 of the Code of Civil Procedure.

The NEW FILMS INTERNATIONAL LLC company considers that the appeal is inadmissible and should be dismissed and that MZ FILMS should be ordered to pay € 10,000 in damages for abusive procedure and € 10,000 under Article 700 of the Code of Civil Procedure.

UPON WHICH:

On the admissibility of the appeal:

The company NEW FILMS INTERNATIONAL LLC argues that the appeal is inadmissible for not being based on one of the opening cases of Article 1502 of the Code of Civil Procedure.

However, considering that MZ FILMS company claims in its writings the lack of an arbitration agreement (Article 1502-1 of the Code of Civil Procedure), its appeal is admissible;

On the sole ground: the arbitrator ruled without an arbitration agreement (Article 1502-1 of the Code of Civil Procedure):

The MZ FILMS company states that the arbitrator erroneously qualifies the memorandum of understanding of 9 December 2005 as a distribution agreement; that this memorandum corresponds to an agreement in principle specifying the main terms on the basis of which the parties were going to establish the distribution agreement, which was not concluded at the end.

However, considering that the memorandum of understanding specifies “All disputes arising out of this memorandum of understanding shall be resolved by arbitration binding under the IFTA International Arbitration Rules in force at the time of the request for arbitration (…) The parties undertake to prepare and sign a more formal contract (…) Until such time as the said contract was signed, this memorandum of understanding shall be a contract binding on the parties”;

That it results from this that an arbitration agreement was concluded; that in application of the principle of autonomy of the arbitration clause, regardless of the fate reserved for the memorandum of understanding and the interpretation made by the arbitrator; that in this respect, the claims of the MZ FILMS company intend in reality to obtain the review of the merits of the award prohibited to the judge of annulment;

That the ground is dismissed and therefore the enforcement order (in French Ordonnance d’exequatur) is confirmed;

On the claim for damages for abusive procedure:

Considering that the NEW FILMS INTERNATIONAL LLC company does not show that the MZ FILMS company abused of its right to action; that its claim is dismissed;

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

Considering that the MZ FILMS company which succumbs and whose request on this account is dismissed pays € 10,000 to the NEW FILMS INTERNATIONAL LLC company;

FOR THESE REASONS:

DECLARES the appeal admissible;

UPHOLDS the enforcement order (in French Ordonnance d’exequatur);

ORDERS the MZ FILMS company to pay to the NEW FILMS INTERNATIONAL LLC company € 10,000 by application of Article 700 of the Code of Civil Procedure;

ORDERS any other request;

ORDERS the MZ FILMS company to pay the costs and admits the SCP Fanet-Serra, lawyer, to the benefit of article 699 of the Code of Civil Procedure.

THE CLERK, THE PRESIDENT