Paris Court of Appeal, No. 08/22135

Paris Court of Appeal – 1st Pole – 1st Chamber – 18 February 2020, No. 08/22135

SOCIETE ALEA EUROPE LIMITED

vs.

COMPAGNIE INTERNATIONALE DE CAUTION POUR LE DEVELOPPEMENT

The company ALEA EUROPE Ltd (hereinafter ALEA), a company incorporated under Swiss law, guaranteed in application of reinsurance treaties the COMPAGNIE INTERNATIONALE DE CAUTION POUR LE DÉVELOPPEMENT (ICD), a company incorporated under French law, for its surety business, 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 judicial liquidation and the appointment of Mr. Y as its representative.

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

By award issued in Paris on 29 April 2008, the arbitral tribunal composed of C D, Chairman, and A B and E F, arbitrators, ruling as amiable compositeur, drew up the financial statements and determined (tables on pages 12 and 13 of the award) for each of the disputed treaties the amount to be borne by the reinsurer in respect of the receivables admitted definitively or provisionally.

On 25 November 2008, ALEA filed an action for annulment against this award on the grounds that its recognition or enforcement is contrary to international public policy (Article 1502-5 of the CPC), that the arbitrators failed to comply with the terms of the mission assigned to them (Article 1502-3 of the CPC) and that the arbitral tribunal was improperly composed (Article 1502-2 of the CPC).

It requests the court to annul the award in its entirety or in the alternative with regard to the legal costs or the treaties 20030 and 20088, to reject the requests of ICD and to condemn Me Y in his capacity to pay him EUR 50.000 by application of article 700 of the CPC.

The SCP Y& G-Y represented by Mr. Y in his capacity as judicial representative in judicial liquidation of ICD asks the court to reject the appeal in particular in application of the rule of estoppel with regard to the ground resulting from the non respect of the mission and to condemn ALEA to pay him EUR 100.000 of damages for abusive procedure and EUR 15.000 under article 700 of the CPC.

UPON WHICH,

##On the first ground for annulment taken from the bias of one of the arbitrators leading to an irregular composition of the arbitral tribunal (article 1502-2 of the CPC):

ALEA invokes in this respect the conditions under which was issued on 15 September 2009 a rectifying award during an arbitration concerning the dispute between ICD and another reinsurer, Globale Re, during which the secrecy of the deliberations was not respected by the arbitrator chosen by ICD who communicated to it the content of the decision before it was issued, which demonstrates its bias and should lead to the annulment of all the awards issued by the arbitral tribunal in favor of ICD.

Whereas, however, ALEA cannot usefully invoke this ground of annulment within the framework of the award, which is the object of the present action, which is not concerned by these complaints which relate to another arbitral award to which it is not a party; moreover, it does not explain in what way these complaints subsequent to the award examined here by more than one year would contaminate it;

Whereas the ground is dismissed;

On the second ground for annulment: the arbitral tribunal did not comply with its mission (article 1502-3° of the CPC):

ALEA claims that a separate arbitration had been introduced by ICD for each of the disputed reinsurance treaties and that as a result separate awards will be issued; that, moreover, the arbitrators had to rule as amiable compositeurs for four treaties, in law for a fifth treaty (treaty 20115), whereas they ruled for the whole in equity.

ALEA states that the rule of estoppel cannot be opposed to it since ICD introduced each arbitration separately and filed separate briefs and that the parties maintained throughout the proceedings the distinction between each of the proceedings; that it is only in its last summary brief that ICD requested the onsolidation of the proceedings, consolidation to which ALEA never consented, its constant position in this respect having even been recalled in its summary defense brief.

Finally, ALEA points out that the award confuses in a single amount the convictions relating to the Treaties 20030 and 20088 whereas these amounts should have been split up.

Whereas, however, ALEA has spontaneously submitted writings in defense common to all the treaties and does not provide proof that it would have opposed the request made by ICD in its summary memorandum of 31 March 2008 for the consolidation of all the proceedings concerning the one and the same reinsurer; whereas thus failing to establish that it has protested and although it has itself filed writings common to all the treaties, it can no longer, by virtue of the rule of estoppel, raise in the context of litigation for annulment the ground based on the arbitrators' ignorance of their mission in that they have proceeded to a consolidation; whereas it should furthermore be observed that the complaint under article 1502 of the CPC must have been raised before the arbitral tribunal; whereas ALEA had every opportunity, before the hearing and afterwards, to develop a written argument against the request for consolidation, which ALEA did not do;

That this branch of the ground is rejected;

Whereas, moreover, that by pronouncing one condemnation under treaties n°20030 and n°20088, the arbitrators did not disregard their mission since they expressly asked ICD to break up the sums due by ALEA (minutes of the hearing of 19 March 2008 quoted by ALEA), which ICD did in fact in annex IV of its memorandum of 31 March 2008 on which ALEA, which thus vainly maintains that it cannot ‘affect the condemnation to the treaties concerned’, could make all useful observations ; Moreover, it should be noted that a breakdown by treaty already appears in the part of the award setting out the facts and claims of the parties (award page 2);

That this branch of the ground is dismissed;

Whereas, on the other hand, if it follows from the terms of the award of 29 April 2008 (page 11) that the arbitral tribunal did indeed rule as amiable compositeur as required by the arbitration clauses of the treaties 20030, 20088, 20083, 20106, the same award includes the treaty 20115 and the arbitration clause it contains does not state that it will be ruled in equity; whereas in so doing the arbitrators did not respect their mission with regard to this treaty and the award deserves annulment but only in so far as it relates to Treaty 20115;

On the third ground for annulment arising from the violation by the arbitral tribunal of international public policy (article 1502-5° of the CPC):

ALEA claims that the award violates international public order since it ruled on the violation of article 9 of the CPC despite the total lack of evidence of certain elements necessary for the success of ICD’s claims. ALEA argues that the arbitral tribunal found that ICD failed to provide ‘documents necessary for the proof’ but did not draw the mandatory consequences of this finding, in particular with regard to the amount to be allocated to the reinsurance accounts for each treaty in respect of premiums, claims paid or to be paid and recoveries to be made.

It adds that there is also a lack of evidence and a violation of international public policy with regard to the legal costs exposed by the judicial liquidation since the arbitral tribunal again notes that ‘the expenses invoked by ICD are neither justified for the liquidation unit nor for the legal costs’. ALEA emphasizes that exhibit n°16 communicated in the arbitration is not a proof but a presentation of the claims.

Whereas, however, in doing so ALEA does not demonstrate a flagrant, effective and concrete violation of procedural public policy, whereas the arbitral tribunal whose mission was in particular to validate, evaluate or research the methodology allowing a fair determination of the balances of the reinsurance accounts, in no way said that the liquidator’s failure to provide proof was total, but only pointed out that the accounts presented for the year 2000 were neither certified nor fully justified, that there were errors and approximations in many areas and that it was necessary, in accordance with his mission, to reconstitute the balance of the treaties;

Whereas, similarly, with regard to the legal costs incurred by the judicial liquidation, the arbitral tribunal estimating, in view of the statement communicated by Mr. Y, that ‘the nature of the management, because of the liquidation and the more complex follow-up of the claims, generated an important charge of fees which partly benefited the reinsurer’, did not rule in the absence of any evidence;

Whereas in reality ALEA invites the court to investigate whether the elements produced could be received as evidence and therefore to revise the award on the merits, which is forbidden to the judge of the annulment;

Whereas the ground is dismissed;

On the request for damages for abusive procedure:

Whereas Me Y in his quality does not establish that ALEA has filed his appeal, to which it is moreover partially granted, by malice, intention to harm or error equipollent to the fraud;

Whereas his request is dismissed;

On requests under Article 700 of the CPC:

Whereas equity does not require that these requests be granted; that ALEA, who succumbs for the most part, bears the costs;

FOR THESE REASONS:

ANNULS the award of 29 April 2008 in respect to its ruling regarding the reinsurance treaty 20115;

DISMISSES the action for annulment for the surplus;

DISMISSES all other requests;

CONDEMNS the company ALEA EUROPE Ltd to the costs and admits the SCP Petit Lesénéchal, avowed, for the benefit of article 699 of the CPC.