Paris Court of Appeal, No. 09/07068

Paris Court of Appeal, Pole 1 - Chamber 1, 1 April 2010, No. 09/07068

Judicial chronology:

Tribunal of Grande Instance de Paris, 13 February 2009

Court of Cassation, First Civil Chamber, 9 March 2011, No. 10-18.763

CHANTIERS DE L’ATLANTIQUE S.A.

vs.

S.A.S. GAZTRANSPORT ET TECHNIGAZ (GTT)

On 17 December 2001, CHANTIERS DE L’ATLANTIQUE (hereafter CHANTIERS DE L’ATLANTIQUE) signed a technology licensing agreement with GAZ TRANSPORT ET TECHNIGAZ (hereafter GTT) for the construction of three LNG carriers, GTT providing its tank insulation technology.

Technical difficulties arose, and CHANTIERS DE L’ATLANTIQUE initiated arbitration proceedings against GTT in accordance with the arbitration clause provided for in the contract.

In a final award rendered in London on 3 February 2009, the ICC arbitral tribunal composed of E F, chairman, and A B and C D, arbitrators, declared CHANTIERS DE L’ATLANTIQUE’s claims unfounded and ordered it to pay GTT € 3,345,278. 20 plus interest at the legal rate, not capitalised, from the due date of the invoices concerned - with the exception of the invoice of 31 May 2006 No. 06.138 for which interest runs from the formal notice of 1 September 2006 until the day of payment. The arbitral tribunal also shared the arbitration costs, rejected all other claims and ordered provisional enforcement of its decision.

This arbitral award was the subject of an enforcement order (in French Ordonannce d’exequatur) issued by the President of the Paris Tribunal of Grande Instance on 13 February 2009.

CHANTIERS DE L’ATLANTIQUE appealed this order. Its appeal is based on two grounds: that the recognition or enforcement of the award is contrary to international public policy (Article 1502-5 of the Code of Civil Procedure) and that the arbitrators ruled without complying with their mission (Article 1502-3 of the Code of Civil Procedure - and not 1502-2 as erroneously indicated in the “by these grounds” of CHANTIERS DE L’ATLANTIQUE’s submissions).

In its submissions of 20 January 2010, CHANTIERS DE L’ATLANTIQUE requested the court to stay the proceedings until the end of the criminal proceedings in progress following the complaint it had lodged with the public prosecutor at the Paris Regional Court against GTT for forgery, use of forgery and fraudulent use of the arbitration award. CHANTIERS DE L’ATLANTIQUE also requested the court to find that it provided evidence that GTT deliberately misled the arbitral tribunal by concealing documents which it was obliged to disclose and whose knowledge by the arbitral tribunal would necessarily have led to a different decision. Furthermore, CHANTIERS DE L’ATLANTIQUE also requested the court to rule accordingly that the enforcement of the award is contrary to public policy and to overturn the enforcement order (in French Ordonnance d’exequatur), subsidiarily for failure to state the reasons for the award in its essential part. Finally, CHANTIERS DE L’ATLANTIQUE requested the court to dismiss GTT’s claims for damages on the basis of Article 700 of the Code of Civil Procedure nd to order it to pay GTT €50,000.

By submissions of 16 February 2010, GTT requested confirmation of the enforcement order (in French Ordonnance d’exequatur) and an order against CHANTIERS DE L’ATLANTIQUE to pay €350,000 in damages for abusive proceedings and €150,000 on the basis of Article 700 of the Code of Civil Procedure.

UPON WHICH:

On the application for a stay of proceedings and the first ground of appeal: the recognition or enforcement of the arbitral award is contrary to international public policy (Article 1502-5 of the Code of Civil Procedure):

CHANTIERS DE L’ATLANTIQUE states that, after the arbitral award and its enforcement were issued (in French Exequatur), “rumors began to circulate in the professional community concerned about the conditions under which the award had been obtained by GTT, after a deliberate falsification by GTT of documents used in the debates and more particularly concerning the documents placed in the data room at the insistence of GTT”. It also states that it thus filed a complaint against GTT with the Paris Public Prosecutor’s Office for falsification of program test reports and use in the context of arbitration proceedings, use of fraudulent manoeuvres in producing the said reports, failure to produce documents in its possession and false statements to mislead the arbitration tribunal and obtain a favourable decision.

In support of its application for a stay of proceedings, CHANTIERS DE L’ATLANTIQUE argues that it is prevented from producing these documents before the court, and thus from proving fraud, because of a decision by the President of the Paris Bar Association, who ordered by a formal notice to withdraw the documents relating to these minutes of proceedings for reasons of confidentiality, which will not exist in the criminal proceedings which will come to light.

CHANTIERS DE L’ATLANTIQUE reminds that by Procedural Order No. 1 of 5 December 2006, the arbitral tribunal requested the parties to provide a list of the documents whose communication was requested, CHANTIERS DE L’ATLANTIQUE states that, before GTT’s resistance, the arbitral tribunal, by order of Procedure No. 3 of 1 October 2007, ordered GTT to produce all the documents requested by CHANTIERS DE L’ATLANTIQUE. CHANTIERS DE L’ATLANTIQUE also reminds that GTT ultimately appealed for confidentiality, which it claimed was necessary, and that an agreement was concluded a consultation in data room of redacted documents, technically unusable and not actually communicated, since they were transmitted by confidential letter, which confidentiality was attached to the documents themselves. CHANTIERS DE L’ATLANTIQUE highlights the testimony of one of its lawyers, Mr Z, who explained in particular the discovery of the concealed or falsified documents.

Finally, by way of example, CHANTIERS DE L’ATLANTIQUE explains that GTT indicated that there was no final version of a FMECA study, even though this essential final version was hidden, as well as an internal document No. 681, an “e-mail” from the National Institute of Applied Sciences addressed to GTT contradicting the position it was taking before the arbitrators, which it therefore knew to be inaccurate, the problems encountered by GTT with 3M adhesive reference 8959 or the technical note requested on the polyurethane adhesive, which GTT said did not exist. CHANTIERS DE L’ATLANTIQUE claims that there were many other deliberate concealments that had a definite impact on the arbitral tribunal’s decision.

Considering, on the request for a stay of proceedings, that according to Article 4 of the Code of Criminal Procedure, the initiation of public proceedings does not require the stay of other actions brought before the civil court, even if the decision to be taken in criminal proceedings is likely to have a direct or indirect influence on the outcome of the proceedings; that, moreover, in the case in point, it must be noted that CHANTIERS DE L’ATLANTIQUE, by filing its complaint only in its letterhead, with the intention of “reserving to the examining magistrate the knowledge of the facts, which are the subject of the complaint brought before it”, does not enable the court to determine whether the facts complained of may have an influence on the present proceedings; that the application for a stay of proceedings is thus rejected;

Considering, on the ground of appeal, that by a Procedural Order No. 3 of 1 October 2007, the arbitral tribunal ordered GTT to communicate to CHANTIERS DE L’ATLANTIQUE all the documents requested by CHANTIERS DE L’ATLANTIQUE and that, in view of the important technical information they contained, it was agreed to place them in a data room to allow their selection and redaction after consultation in a confidential setting; that this last point caused difficulties, and the arbitral tribunal invited the parties to reach an agreement by Procedural Order No. 4 of 14 November 2007 and to refer the matter to the arbitral tribunal in the event of difficulties; that no agreement was reached, that CHANTIERS DE L’ATLANTIQUE maintained its request for communication of the unredacted documents in the data room and finally waived and referred the matter to the arbitral tribunal and the communication of these documents;

It is therefore inappropriate for CHANTIERS DE L’ATLANTIQUE to claim today that those documents were deliberately concealed, regardless of the fact that they were transmitted in a letter whose confidentiality was attached to the documents themselves;

Furthermore, it alleges rumours of fraud and the discovery of documents that were in the possession of GTT, which knowingly withheld them, or the production of falsified documents; however, on the one hand, it does not justify the fact that GTT was necessarily in possession of the documents not produced, in particular e-mails or technical notes that it may not have kept. On the other hand, it does not provide evidence that it discovered them after the award has been made. The testimony of Mr. Z before the High Court in London, which describes the strange circumstances surrounding this discovery, does not shed any light on this point, and does not show that the documents allegedly withheld would have had any influence on the decision of arbitrators;

On this last point, CHANTIERS DE L’ATLANTIQUE seeks to draw the court into a technical and substantive debate which is beyond the jurisdiction of the annulment judge;

That in reality, even if certain documents were withdrawn from the proceedings after the opinion of the professional ethics commission of the Paris Bar Association, it must be noted that CHANTIERS DE L’ATLANTIQUE fails to prove the fraud of which it claims to be a victim;

That the ground is rejected;

On the second ground: the arbitral tribunal ruled without complying with its mission (article 1502-3 of the Code of Civil Procedure):

Reminding that according to the ICC Rules of Arbitration, arbitrators have the obligation to state reasons for their award, CHANTIERS DE L’ATLANTIQUE alleges that the arbitral tribunal failed to state reasons for paragraphs 459 [and not 469], 472, 498, 537 and 550 of the arbitral award, which all start with “after considering the positions of the parties and the documents relied upon in support thereof, the arbitral tribunal shall consider (…)”, a mere sentence which cannot be considered as a statement of reasons.

But considering that the arbitral award consists of 247 pages and 1,417 paragraphs, which obviously constitutes a scrupulous and careful reasoning even if it displeases CHANTIERS DE L’ATLANTIQUE ;

Moreover, the five paragraphs referred to in the ground each constitute a conclusion after a detailed examination of the parties’ positions and a careful reading of the decision convinces that the ground is in fact missing;

That this second ground is rejected and the enforcement order (in French Ordonnance d’exequatur) confirmed;

On GTT’s claim for damages for abusive proceedings:

Considering that GTT does not justify that CHANTIERS DE L’ATLANTIQUE has abused its right to take legal action; that its claim for damages is rejected;

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

Considering that CHANTIERS DE L’ATLANTIQUE, who is unsuccessful, is dismissed from his claim and as such pays 150.000€ to GTT;

FOR THESE REASONS:

REJECTS the application for a stay of proceedings;

CONFIRMS the order of the President of the Tribunal de Grande Instance de Paris of 13 February 2009 declaring enforceable the arbitral award rendered in London on 3 February 2009 by E F, A B and C D;

ORDERS the company CHANTIERS DE L’ATLANTIQUE to pay to the company GAZ TRANSPORT ET TECHNIGAZ €150,000 pursuant to Article 700 of the Code of Civil Procedure;

REJECTS any other request;

ORDERS CHANTIERS DE L’ATLANTIQUE to pay the costs and admits the SCP Grappotte Bénétreau Jumel, avowed, for the benefit of article 699 of the Code of Civil Procedure.