Paris Court of Appeal, No. 05/06012 | Rory Wheeler, avocat (Paris) & solicitor (England)

Paris Court of Appeal, 17 December 2009, n° 05/06012

La SOCIETE SMEG NV

Vs.

La SOCIETE EARL POUPARDINE

SMEG NV, a company under Belgian law, purchased 247 tons of feed wheat by contract dated 11 August 2003. from EARL POUPARDINE, a company under French law. The wheat was to be loaded in France at Bron (Cher) and transported to Ghent in Belgium.

By letter of 12 November 2003 the company POUPARDINE has informed SMEG that it would not perform the contract on the grounds that the company SMEG was no longer allowed to collect cereals under cultivation in France.

SMEG had been the subject of a decision of the ONIC of 3 June 2003 to be removed from the register of declarations of accreditation as a collector-exporter of cereals referred to in Article 621-16 of the Rural Code.

In April 2003, SMEG filed a complaint against France concerning the accreditation of collectors approved by the ONIC and the European Commission which has decided to initiate an infringement procedure.

On 5 December 2003 SMEG initiated arbitration proceedings before the Arbitration Chamber of Paris in accordance with the arbitration clause contained in Article 33 of the conditions general RUFRA rules applicable to the contract.

By award issued in Paris of 5 January 2005 the arbitral tribunal composed of F G-H, Chairman, and X Y and Z A, arbitrators, noted the defendant’s absence, the EARL POURPADINE, neither present nor represented, and declared SMEG’s claim to be ill-founded, and at the very least brought before a court that was not competent to hear it, and referred it back for further consideration.

This decision was the subject of an exequatur order of 18 January 2005.

SMEG has filed an action for annulment against the award. It relies on two grounds in law, the non-compliance by the arbitrators with their mission and the violation international public order.

By judgment of 7 December 2006, the Court reopened the debates to allow the parties to present their explanations on the international character of the arbitration and, in this hypothesis, to explain the action for annulment brought by the company SMEG.

By judgment of 20 December 2007, the court issued a stay of proceedings until the end of the infringement procedure opened by the European Commission against France.

The European Commission has sent a reasoned opinion to France by enjoining it to amend the regulations applicable to cereal collectors, which was done by a decree n° 2007-870 of the 14 May 2007.

In its submissions of 3 June 2009 SMEG requests the Court:

to set aside the application of Article L 621-16 of the Code the provisions in force at the time facts,
to set aside the arbitral award on the basis of the Articles 1502-3 and 1502-5 and 1504 of the Code of Civil Procedure, and in the alternative on the basis of articles 1483-3 and 1484-6 of the same code,
and consequently to annul the exequatur order on the basis of Article 1504, and alternatively 1488 of the Code of Civil Procedure,
if necessary, to submit a reference for a preliminary ruling to the European Court of Justice on the interpretation of Articles 29 and 49 of the EC Treaty, and of the Regulation on the common organization of the grain markets.

The EARL POUPARDINE cited in application of the articles 656 and 658 of the of the Code of Civil Procedure being absent and not having appointed counsel, the judgment will be issued in absentia (in default)

UPON WHICH,

Whereas it should be recalled that the previous judgment of 20 December 2007 stated that the arbitration between SMEG and POUPARDINE involves the interests of international trade, must therefore be qualified as international arbitration within the meaning of Article 1492 of the Code of Civil Procedure and that the claimant may file an action for annulment against an award thus issued in France in arbitration matters international in the cases provided for in Article 1502 of the Code of Civil Procedure;

On the first ground for annulment: the court arbitral tribunal ruled without complying with the mission entrusted to it (Article 1502-3 of the Code of Civil Procedure):

SMEG claims that the court, in finding that it was ‘not competent at this stage to assess (…) the conformity of French law with the provisions Community law, in particular Articles 28 and 29 of the 29 of the Treaty of Rome’ has misunderstood its mission which was to apply all the legal rules governing the contractual relations between the parties, which Community rules; whereas the arbitral tribunal was required to rule on the compatibility between the said rules and the legislative provisions invoked by the company POUPARDINE.

Whereas, however, the dispute was limited to the contractual relations between SMEG and POUPARDINE, the latter claiming that the unilateral breach of contract by the company POUPARDINE had no legal basis and claiming compensation for damages;

Whereas the arbitrators did not have jurisdiction to rule on the merits of the withdrawal of accreditation decided by the ONIC which was imposed on EARL POUPARDINE which itself did not have to assess the legality of this decision;

Whereas arbitrators rightly deduced that the EARL POUPARDINE could not be reproached for a wrongful termination of the contract, without calling into question the decision of the ONIC;

Whereas noting ‘that in reality, it appears from the submissions that what the applicant contests is not so much the position of his buyer (…) as the decision to withdraw the accreditation taken by the ONIC’ . The arbitrators were able, without disregarding their mission, to say that they were not competent to assess the relevance of such a decision taken in application of the rules of law applicable in France at the time of the conclusion of the contract and consequently were not competent to rule on the conformity of French law with the Community provisions, this assessment being outside the scope of their mission;

Whereas the ground for annulment is dismissed;

On the second ground for annulment: recognition or execution are contrary to international public policy (article 1502-5 of the Code of Civil Procedure):

SMEG claims that the court violated the international public policy by refusing to examine the legality of article L621-16 of the Rural Code with regard to the rules of the Common Market thereby depriving it from its rights drawn from the principles of free movement of goods, freedom to provide services and goods, and freedom of establishment

Whereas, however, for the same reasons explained above, it did not fall within the scope of the mission of the arbitrators to examine the conformity of the Article L 621-16 of the Rural Code to the provisions of the EEC Treaty;

Whereas SMEG does not furthermore demonstrate in any way how the solution adopted by the arbitral tribunal would blatantly, effectively and efficiently violate international public policy;

Whereas in reality it is once again seeking to call into question the merits of the decision to withdraw the accreditation taken by the ONIC, which the court is not competent to examine;

Whereas the second ground for annulment and hence the appeal are dismissed;

FOR THESE REASONS:

Ruling in absentia,

Having regard to the judgments of 7 December 2006 and 20 December 2007,

DISMISSES the action for annulment;

ORDERS SMEG NV to pay the costs.