Paris Court of Appeal, No. 08/22780

Paris Court of Appeal, First Chamber, 25 February 2010, No.08/22780

FEDERATION FRANCAISE D’ETUDES ET DE SPORTS SOUS-MARINS (FFESSM) Vs. Y & ASSOCIATES P.C. (Y)

The FEDERATION FRANCAISE D’ETUDES ET DE SPORTS SOUS-MARINS (FFESSM) is a non-profit organization having its headquarters located in Marseilles. On 17 November 2004, its president, Mr. C A and its secretary general, Mr. D B, signed a contract for the provision of legal services with the American law firm Y & ASSOCIATES (Y) to defend a lawsuit brought before a New York court by the ASSOCIATION EQUIPE COUSTEAU and COUSTEAU SOCIETY for infringement of the rights attached to the “Calypso” trademark.

After a dispute arose regarding the fees owed to Y, the latter, pursuant to the arbitration clause in the contract, filed a request for arbitration before the American Arbitration Association (AAA).

In an award rendered in New York on 26 June 2007, the sole arbitrator, Ms. Z, jointly and severally ordered the FFESSM, Mr. A and Mr. B to pay Y, after deduction of the USD 30,000 provision, a balance of USD 38,201.75, in addition to USD 10,922.74 in interest accrued to the date of the award, and costs.

This award was made enforceable in France by an order of the President of the Paris Civil Court (Tribunal de Grande Instance) dated 1 September 2008, against which an appeal was filed on 3 December 2008 by the FFESSM, Mr. A, and Mr. B.

In their pleadings of 26 November 2009, the FFESSM, Mr. A and Mr. B. asked the Court to declare that the President of the Paris Civil Court (Tribunal de Grande Instance) lacked subject matter jurisdiction and territorial jurisdiction and to declare the Enforcement Judge or, in the alternative, the President of the Marseilles Civil Court, competent to annul the decision for failure to observe due process (in French: principe de contradiction), to dismiss the case personally against Mr. A and Mr. B., to acknowledge that Y has received a provision of 30,000 USD and does not justify any work performed, finally, to condemn Y to pay the sum of EUR 10,000 in application of Article 700 of the civil code of procedure.

In its pleadings of 23 December 2009, Y solicits the rejection of the jurisdictional objections, the confirmation of the order of enforcement, the dismissal of the appellants' claims and the condemnation of the latter to pay the sum of EUR 20,000 in application of Article 700 of the Code of Civil Procedure.

UPON WHICH

Regarding the jurisdictional objections:

The appellants argue that under article 1498 of the Code of Civil Procedure the subject matter jurisdiction to order the enforcement of a foreign arbitral award belongs to the enforcement judge and not to the president of the civil court. They argue, moreover, that in the absence of special provisions, the Paris Civil Court, which is not the jurisdiction of the defendants’ residence, nor the court within whose jurisdiction enforcement could be pursued, does not have territorial jurisdiction.

Whereas, firstly, that it follows from articles 1477, 1478, 1498, 1500 of the Code of Civil Procedure and R 212-8 2° of the Code of Judicial Organization that the president of the civil court, ruling as a single judge by order on a non-contradictory application, has sole jurisdiction to hear a request for enforcement in France of an arbitral award rendered abroad; that the plea of lack of material jurisdiction must therefore be dismissed;

Whereas, secondly, that in matters of international arbitration, excluding any fraud, the President of the Paris civil court is competent to rule on a request for recognition or enforcement of an award rendered abroad when the legislator has not instituted any specific territorial jurisdiction, that article 42 of the Code of Civil Procedure is not intended to apply in this matter and that the choice of this jurisdiction is appropriate in view of the international nature of the dispute; that the appellants’ objection based on lack of territorial jurisdiction, in the absence of any fraud in the choice of the Paris civil court, must therefore also be rejected;

On the grounds of the irregularity of the appointment of the sole arbitrator and the breach of due process (in French: principe de contradiction) (Articles 1502-2 and 1502-4 of the Code of Civil Procedure):

The appellants argue that the referral to the arbitrator was notified (in French: dénoncée) to them, in disregard of the requirements of domestic and international law, especially of the provisions of the Hague Convention of 15 November 1965; that the documents of the proceedings were not translated into French contrary to the provisions of article 4(2) of the New York Convention of 10 June 1958; that the contract for the provision of legal services did not lay down any rules of procedure in the event of recourse to arbitration and that the sole reference to the AAA Arbitration Rules was insufficient to impose American as the language of the proceedings; that their failure to participate in the arbitration required that all procedural documents be notified to them in French.

Whereas under the terms of article 1494 of the Code of Civil Procedure: the arbitration agreement may, directly or by reference to an arbitration rule, regulate the procedure to be followed in the arbitral proceedings; it may also submit the arbitration agreement to the law of procedure which it determines;

Whereas article 7 of the agreement of 17 November 2004 concluded between the parties stipulates that any future disagreements on the fees shall be subject to arbitration by a sole arbitrator under the rules and under the auspices of the AAA;

Whereas, firstly, pursuant to article 2 of these rules, a written request for arbitration, specifying the object and cause of the request, was sent by Y on 12 and 14 March 2007 to the FFESSM, to Mr. M. A and M. B and to the administrator of the International Center for Dispute Resolution (ICDR), the international branch of the AAA. In the absence of replies from the defendants to the letters with acknowledgement of receipt inviting them to choose their arbitrator, the latter was appointed by the administrator;

The conditions for referral to the arbitral tribunal and for the appointment of the arbitrator - which are not subject to the provisions of The Hague Convention of 15 November 1965 for the Service Abroad of Judicial and Extrajudicial Documents - appear to be in conformity with the procedural rules to which the parties have agreed to abide by in reference to the arbitration clause in the AAA Arbitration Rules;

Whereas, secondly, according to article 14 of these rules, the language of the arbitration is that of the document containing the arbitration agreement. The agreement signed by the appellants and containing the arbitration clause is written in American. Therefore, the fact that, in accordance with the will of the parties, the proceedings were conducted in this language does not violate the principle of contradiction; nor does it disregard the provisions of the New York Convention of 10 June 1958, of which article 4 merely provides, for the purposes of enforcement, for the translation of the sentence into the language of the State in whose territory enforcement is sought;

Whereas, finally, contrary to what is disputed by the appellants, they were informed by letter with acknowledgement of receipt of all the stages of the arbitration procedure and were made able to present their defense under the conditions provided for by the arbitration rules;

Consequently, the means taken from the irregularity of the appointment of the arbitrator and the breach of due process (in French: principe de contradiction) cannot be accepted;

On the grounds drawn from fraud:

The appellants allege that Y deceived the arbitrator by obtaining a joint condemnation of the FFESSM and its representatives, although the Federation was the only party to the contract for the provision of legal services, given that COUSTEAU SOCIETY and the ASSOCIATION EQUIPE COUSTEAU sued only the Federation.

Whereas, contrary to what the appellants contend, the contract for the provision of legal services, including the arbitration clause, was signed separately by the FFESSM represented by Mr. C A, Mr. C A and Mr. D B. The plea, which in reality criticizes the merits of the arbitrator’s decision and invites the Court to proceed to a review of the award that the annulment judge is prohibited from doing, can only be dismissed. For the same reason, the application for dismissal of Mr. A and Mr. D cannot be granted.

Whereas it follows from all of the foregoing that the order of enforceability must be confirmed and the appellants' requests rejected; that the appellants, which together will have to pay Y the sum of EUR 20,000 in application of article 700 of the Code of Civil Procedure;

FOR THESE REASONS:

Rejects the objections of lack of jurisdiction.

Confirms the order of the President of the Paris civil court of 1 September 2008, granting the enforcement of the award rendered between the parties in New York on 26 June 2007;

Dismisses the requests of the FEDERATION FRANCAISE D’ETUDES ET DE SPORTS SOUS-MARINS, Mr. C A and Mr. D B;

Condemns jointly and severally the FEDERATION FRANCAISE D’ETUDES ET DE SPORTS SOUS-MARINS, Mr. C A and Mr. D B. to pay to the company Y & ASSOCIATES PC the sum of EUR 20,000 euros in application of article 700 of the code of civil procedure.

Condemns the same jointly and severally to the costs and admits the SCP FANET and SERRA, affirmed, to the benefit of article 699 of the code of civil procedure.

THE REGISTRAR, THE PRESIDENT