Paris Court of Appeal, No. 09/09688

Paris Court of Appeal, Pole 1, First Chamber, 17 June 2010, No. 09/09688

S.A.R.L. AFRICAN PETROLEUM CONSULTANTS (X)

vs.

S.A. SOCIETE NATIONALE DE RAFFINAGE (SONARA) (Y)

The national refining company (Y), a company incorporated under the Cameroonian law whose main object is to proceed the crude oil acquired from supplier countries, signed on 20 October 1995 a contract of Nigerian crude oil supply with the Africa Petroleum Consultants (X), a company of Cameroonian law operator in the oil sector, claiming to represent the company NIGERIAN NATIONAL PETROLEUM CORPORATION (NNPC), under the terms of which the latter undertook to provide it with 400,000 barrels of crude oil.

Alleging a breach of contract, X initiated arbitration proceedings under the arbitration clause inserted in Article 17 of the contract. An award was issued in absentia on 17 April 2002 in London under the terms of which the sole arbitrator, Mr. C A B, ordered Y to pay to X the sum of US$ 2,724,800 as damages. According to the order of 17 November 2008, the President of the Paris Tribunal of Grande Instance has declared the award as enforceable.

Informed by Y about the existence of fraud and criminal proceedings against the manager of X for false statements and attempted fraud, the sole arbitrator, himself heard in these criminal proceedings initiated in Cameroon, convened the parties again, and issued on 18 March 2003 an arbitral award which sets aside that of 17 April 2002, mainly on the grounds that due to fraud, the contract is null and void and that X could not act to obtain compensation for the breach of contract by Y.

Pursuant to an order of 2 April 2009, the President of the Paris Tribunal of Grande Instance declared granted recognition and enforcement to the award and the order was notified to X on 3 April 2009.

X appealed against the enforcement order (in French Ordonnannce d’exequatur) and, at the same time, filed an action for annulment of the award of 18 March 2003. The two proceedings were joined by order of 27 November 2009.

X raises three grounds in support of its application for annulment of the order of exequatur of the 2 April 2009: the arbitrator ruled without an arbitration agreement (Article 1502-1 of the Code of Civil Procedure), the arbitrator was improperly appointed (article 1502-2 of the Code of Civil Procedure) and due process (in French Principe de la contradiction) has not been respected (Article 1502-4 of the Code of Civil Procedure). It also requests that Y be ordered to pay the sum of 10,000 under Article 700 of the Code of civil Procedure.

Y claims that the application for annulment of the exequatur order must be rejected, seeks the confirmation that none of the grounds for annulment is founded and requests the court to order X to pay 10,000¿ pursuant to Article 700 of the Code of Civil Procedure.

UPON WHICH,

On the admissibility of the claimant’s application for annulment of the award and of the appeal against the enforcement order (in French Ordonnance d’exequatur):

By submitting that the subject of its action is directed “against the decision that granted recognition and enforcement in France of the document issued on 18 March 2003, and not against the document itself”, X necessarily admits that its action for annulment is inadmissible and that only its appeal against the order granting enforcement (in French Exequatur) to the arbitral award issued in London is admissible.

On the first ground: the arbitrator decided without arbitration agreement (article 1502-1 of the Code of Civil Procedure):

X states that an arbitrator’s jurisdiction is based solely on the arbitration agreement accepted by the parties and that in this case, the only possible basis for the arbitration which gave rise to the award of 18 March 2003 is the arbitration clause inserted in Article 17 of the contract. It submits that after the first award of 17 April 2002, which has the force of res judicata, the sole arbitrator could not continue the investigation of the dispute on his own initiative and retract his decision without having been reappointed by the parties; that otherwise the sole arbitrator acted in breach of the arbitration clause and of English arbitration law (the 1996 Arbitration Act) which do not permit an arbitrator to refer the matter to himself for the setting aside of an earlier award made in accordance with English law. It therefore considers that the award is void ‘for lack of jurisdiction’ of the arbitrator because the parties did not agree to submit the dispute to him ;

Considering that it follows from the general principles of law regarding fraud that the withdrawal of an arbitral award issued in matters of international arbitration must be admitted in case of fraud when the arbitral tribunal may be reconvened after the award has been made ;

Considering that the decline of jurisdiction of the sole arbitrator by the award of 17 April 2002 is compatible, not with the introduction of new proceedings, but with the reopening of the proceedings by this arbitral tribunal since it notified the parties that, because of fraud attributed to X, the first award ‘had not put an end to the dispute between the parties’; Consequently, the procedural fraud committed by X made it possible for the arbitrator - chosen by the parties - who made the award to withdraw it; moreover, although the arbitral award of 17 April 2002 was made enforceable in France, X does not establish or even allege that the enforcement order was notified to Y ;

That X objects in vain that there was no agreement of the parties to the referral of the case to the arbitrator since a possible conventional withdrawal of the award is totally utopian in case of fraud; that the arbitral tribunal accepted the principle of withdrawal after having interpreted the English law of procedure on the revision of awards and that, as for the law applicable to the merits, the court does not have to rule on the proper application by the arbitrator of the English law of procedure ;

Considering that the sole arbitrator considered that the award of 17 April 2002 was taken by the fraud of X through, on the one hand, the letter of 28 August 2002 from the company NIGERIAN NATIONAL PETROLEUMCORPORATION (NNPC) stating that it had no knowledge of a contract signed on its behalf on 20 October 1995, that X was totally unknown to it and that it had not mandated Mr. On the other hand, X did not mention that the criminal proceedings brought against the manager of X, Mr. Ekollo Moundi, who was sentenced by the Cameroonian courts to five years' imprisonment for fraud and breach of trust after the award was handed down on 18 March 2003;

Considering that since the contested arbitral award withdrew the award of 17 April 2002 acquired by fraud which had been concealed from the arbitrator and that X, which does not invoke a violation of international public policy, does not prove that the award of 18 March 2003 was retracted by procedural fraud on the part of Y. The first ground based on the absence of an arbitration agreement is thus reiterated

On the second ground: the sole arbitrator was impropriety appointed (article 1502-2 of the Code of Civil Procedure) :

X alleges that the sole arbitrator was not appointed by the parties to render a second award and that he or she has ‘self-proclaimed’ himself as arbitrator on the sole request of Y when he ‘had no jurisdiction’ to make any kind of award as he had not been appointed by the parties.

However, considering that Mr. C A B was appointed by X to settle the dispute between it and Y under the arbitration clause contained in Article 17 of the contract; that the request for withdrawal must be made before the same judge as the one who ruled, the withdrawal was rightly made before Mr. C A B. The second ground for annulment of the improper appointment of the arbitrator is thus dismissed ;

On the third ground: the arbitrator failed to comply with due process (in French Principe de la contradiction) (article 1502-4 of the Code of Civil Procedure) :

Through a bailiff, X maintains that it received a notice of correspondence on 14 March 2003 in which the sole arbitrator states that the arbitral tribunal intends to review the award of 17 April 2002 but that X was not convened for the hearing of 18 March 2003 at which the sole arbitrator made his award.

Given that X falsely claims that the sole arbitrator would not have respected the adversarial process stating that it would have misled as to the date of the hearing by notification of 14 March 2003 whereas it was limited to inviting the parties to settle the fees and expenses, clearly stating that the hearing date was fixed by a separate act, and that in its letter dated 6 March 2003 addressed to the arbitrator, X that declares itself opposing the withdrawal of the award confirms having been convened for the date of 18 March 2003;that the third ground is dismissed and thus, the exequatur order of 2 April 2009 declaring the award enforceable is confirmed

Considering that X wrongly claims that the sole arbitrator did not comply with due process (in French Principe de la contradiction) on the ground that it was misled as to the date of the hearing by the notification of 14 March 2003. However, this notification merely invited the parties to pay the costs and fees, making it clear that the date of the hearing was fixed by a separate document, and that X, who stated that it objected to the withdrawal of the award, confirmed that he had been summoned for the date of 18 March 2003 in its letter of 6 March 2003 addressed to the arbitrator. Thus, the third ground is rejected and that, consequently, the enforcement order (in French Ordonnance d’exequatur) of 2 April 2009 declaring the award made in London on 18 March 2003 enforceable is upheld.

On the application under Article 700 of the code of civil procedure

Considering that X, should be ordered to pay to Y the sum of 10,000¿ pursuant toArticle 700 of the Code of Civil Procedure.

FOR THESE REASONS:

HOLDS inadmissible the action for annulment against the Award issued in London on 18 March 2003,

UPHOLDS the exequatur order of 2 April 2009 declaring enforceable the award issued in London on 18 March 2003,

ORDERS X to pay Y the sum of 10,000¿ in respect of Article 700 of the Code of Civil Procedure,

ORDERS X to pay the costs and admits the SCP MENARD SCELLE MILLET, avowed, for the benefit of the article 699 of the Code of Civil Procedure.