Paris Court of Appeal, No. 08/16276 | Rory Wheeler, avocat (Paris) & solicitor (England)

Paris Court of Appeal, 17 December 2009, No. 08/16276

FICHTNER GMBH & CO. KG vs. S.A. LKSUR

FICHTNER GMBH & CO.KG (FICHTNER), incorporated under German law, and LKSUR, incorporated under Uruguayan law, both active in engineering consulting, signed a cooperation contract on 21 February 2003 for the preparation of a draft waste management plan for the city of Montevideo. This agreement was supplemented by a subcontracting agreement entered into on 18 November 2003.

Disputes having arisen between the parties, LKSUR, in accordance with Article 12 of the agreement of 18 November 2003, filed a request for arbitration with the International Chamber of Commerce on 2 October 2006.

A sole arbitrator, Mr. G H I, was appointed on 27 April 2007. He rendered an award on 28 March 2008 in Paris which:

orders FICHTNER to pay LKSUR the sum of USD 182,368.38 in unpaid fees;
awards the FICHTNER company the sum of USD 48,951.50;
condemns FICHTNER to pay to LKSUR the sum of 39,786 USD ‘for extraordinary assignments of experts’;
fixes the balance owed by FICHTNER to LKSUR at USD 173,203.14 after compensation;
divides by half between the parties the arbitration costs amounting to 50,000 USD.

On 13 August 2008, FICHTNER filed an action for annulment against this award.

On 23 September 2008, the arbitrator issued an addendum correcting the original award from USD 173,203.14 to USD 183,292.84, which increased the amount owed by FICHTNER from USD 173,203.14 to USD 183,292.84 and stated that each party should bear its own costs. A new addendum was rendered on 17 March 2009. The two appeals filed by FICHTNER against these addenda on 27 May 2009, registered under numbers 09/11831 and 09/11832, were joined to the main proceedings (n° 08/16276) by order of 11 June 2009.

On 29 September 2009, FICHTNER filed a statement of claim for forgery through its lawyer, Mr. HUYGHE, who held a special power of attorney. The claim is against paragraphs 5, 46, 48, 77 and 78 of the award of 28 March 2008 wherein they mention that testimonies were collected by the arbitrator.

By pleadings of 5 November 2009, FICHTNER requests that a stay of the proceedings be granted while pending the decision to be rendered on the forgery claim. It further alleges that the award of 28 March 2008 should be annulled, that LKSUR’s claims should be dismissed and that it should be ordered to pay the sum of 25,000 euros (excluding VAT) pursuant to Article 700 of the French Code of Civil Procedure.

By pleadings dated 23 October 2009, LKSUR requests the Court to dismiss the forgery claim, to declare that there is no reason to stay the main proceeding, to dismiss the action for annulment of the award and to order FICHTNER to pay the sum of 40,000 euros pursuant to Article 700 of the Code of Civil Procedure.

The file was communicated on 5 November 2009 to the Public Prosecutor’s Office, which did not submit any pleadings.

UPON WHICH

On the claim of forgery:

FICHTNER argues that the arbitrator, in paragraphs 5, 46, 48, 77 and 78 of his award, refers to the testimony of Messrs. Y, Z and A, whereas the first two were heard as representatives of the parties, and not as witnesses, and the third was not heard.

Regarding the qualification of statements of Mr. Z and Mr. Y as testimony:

Considering that in matters of international arbitration it follows from article 1494 of the Code of Civil Procedure that the rules of procedure of the arbitral court are determined by the arbitration agreement and, where necessary, by the arbitrator;

Considering that in the present case, the Terms of Reference, the Rules of Arbitration of the International Chamber of Commerce to which they refer, as well as the agreements taken by the arbitrator with the parties for the hearing of the case - which do not include any reference to the provisions of a national procedural law - do not set out the modalities according to which the representatives of the parties and the witnesses are heard, and do not make any distinction as to the weight attached to their respective statements; that consequently, the probative value of these statements is assessed at the discretion of the arbitrator;

That, from then on, the latter was able, without tainting his award with forgery, to qualify as testimony the declarations of Mr. Z and Mr. Y, respectively representatives of FICHTNER and of LKSUR ;

Regarding the hearing of Mr. A:

Considering that it is incumbent upon the plaintiff in the forgery claim to demonstrate the inaccuracy of the allegedly false statements;

Considering that, in order to argue that Mr. A - whose testimony is referred to in the award at paragraphs 46 and 48 - was not heard at the single hearing held on 10 October 2007, FICHTNER produces affidavits from its representatives at that hearing, Mr. Z and Mr. A, from its lawyer Mr. B and from the latter’s interpreter, Ms. C; that LKSUR, for its part, produced affidavits from Mr. Y, its representative at the hearing and from Mr. D, the lawyer who assisted him, as well as from the arbitrator;

Considering that it follows from these documents that FICHTNER was represented at the hearing by two persons - Mr. Z and Mr. A - while LKSUR was represented only by Mr. Y, it was decided, in order to preserve the balance of the proceedings, that Mr. A would leave the hearing room and would be heard later as a witness; that it is undisputed that Mr. A returned to the courtroom twice - only to bring faxes and sandwiches, according to the certificates produced by FICHTNER - but also to provide explanations on the facts of the case, as certified by the opposing party;

Considering that, in the absence of notes or minutes of the hearing, these affidavits drawn up two years after the facts, by clerks or counsel for the parties, who, without contesting the presence of Mr. A at the hearing, differ only on the extent of his role, are insufficient to establish the falsity of the disputed statements in the award ;

That it is therefore appropriate to dismiss the claim for incidental forgery and to examine the dispute in the main proceedings;

On the ground of annulment taken from the breach of due process (in French: principe de contradiction) (article 1502-4 of the Code of Civil Procedure):

FICHTNER argues, firstly, that a letter and pleadings, sent by LKSUR to the arbitrator on 18 October 2007 and 8 and 9 November 2007 respectively, were not sent to it until 13 November 2007 for the first and 29 September 2008 for the second, in both cases, after the closing of the proceedings, which took place on 10 November 2007, without the arbitrator acceding to its request for postponement of the closing in order to allow it to respond to the new allegations contained in these documents. FICHTNER maintains, secondly, that the arbitrator accepted, after the closing of the proceedings, without ordering their reopening and without inviting him to present his observations, pleadings filed by LKSUR on 16 November 2007, which were not limited to developing arguments in response but contained new elements. FICHTNER alleges, thirdly, that the arbitrator’s refusal to hear one of the witnesses whose testimony it had requested, Mr. A, violated the rights of the defense. Finally, FICHTNER argues that the arbitrator, who claims to base his decision, inter alia, on the testimony of Z, F and A, heard the first two as representatives of the parties and not as witnesses, and did not hear the third.

Considering that under the terms of Article 1502-4 of the Code of Civil Procedure, the nullity of the award is incurred when due process (in French: principe de contradiction) has not been respected;

Considering that article 3 § 2 of the Rules of Arbitration of the International Chamber of Commerce allows for the notification by fax of pleadings and written communications; that, however, the production of a fax and its acknowledgement of receipt establishes the reality of the sending, its contents and its receipt only if the integrity of the documents produced, when contested, does not appear doubtful;

Considering that in this case, after an initial exchange of pleadings, and the hearing held on 10 October 2007, the hearing was closed on 10 November 2007; that the award mentions (§ 54 and 55), without any further precision, that writings containing new and additional allegations were sent to the arbitrator by LKSUR on 8 and 9 November 2007;

Considering that in order to maintain that these pleadings had been communicated to FICHTNER before the closing of the proceedings, LKSUR produces a fax of these two documents which would have been sent on 9 November 2007 by the arbitrator to Mr. B, counsel of FICHTNER, as well as the acknowledgement of receipt of this sending;

However, considering, on the one hand, that whereas the schedule mentions a sending of thirty pages in addition to the accompanying letter, the attached documents - i.e. the two pleadings of LKSUR - are effectively numbered up to 31 but with an interruption in the numbering between the last page of the first pleading (pages 2 to 5) and the first page of the second pleading (pages 10 to 31); on the other hand, that the report of the emissions and receipts of the recipient fax machine, that of Mr. B., counsel for FICHTNER, does not mention any fax from the arbitrator’s fax machine (No. 915829233) on 9 November 2007, whereas the same report mentions the dispatch of FICHTNER conclusions on the same day to the arbitrator at 4:13 p.m. and to the counsels for LKSUR at 4:23 p.m.;

It is therefore not established that the briefs at issue - which indisputably contained new allegations - were subjected to adversarial debate;

Considering that it is appropriate to pronounce the annulment of the award of 28 March 2008 and, consequently, that of its two addenda;

Considering that LKSUR, which succumbs, must pay the sum of 3,000 euros to FICHTNER pursuant to Article 700 of the Code of Civil Procedure;

FOR THESE REASONS:

DISMISSES the incidental request for registration of forgery.

ANNULS the sentence of 28 March 2008 and its addenda of 23 September 2008 and 17 March 2009.

CONDEMNS LKSUR to pay to FICHTNER the sum of 3,000 euros pursuant to Article 700 of the Code of Civil Procedure.

ORDERS LKSUR to pay the costs and admits that Me HUYGHE, solicitor, for the benefit of article 699 of the Code of Civil Procedure.