Court of Cassation, No. 09-10.198

Court of Cassation, First Civil Chamber, 26 January, 2011, No. 09-10.198

INSTITUT NATIONAL DE LA SANTÉ ET DE LA RECHERCHE MÉDICALE (INSERM)

Vs.

LETTEN FERGERSTEN SAUGSTAD’S FUND (LFSF)

Summary:

It is sufficient that the dispute submitted to the arbitrator has an international nature within the meaning of article 1492 of the code of civil procedure, that it concerns a transaction which is not economically settled in a single State, and this regardless of the status or nationality of the parties, the law applicable to the merits or to the arbitration, or the seat of the arbitral tribunal.

As a result, the court of appeal, which noted that the “memorandum of understanding” containing an arbitration clause concluded between a public scientific institution and a foundation incorporated under Norwegian private law was intended to promote the realisation of a project for the construction in France of a research center in neurobiology, which was financed for the most part by the foundation, which involved the movement of funds of the Norwegian foundation across borders, characterizes an international arbitration.

Full text:

Whereas the Institut National de la Santé et de la recherche médicale (INSERM) and the Letten F. Saugstad Fund (the Fund), an association incorporated under Norwegian private law, entered into a “memorandum of understanding” relating to the construction of a research pole in neurobiology, including an arbitration clause ; that following a dispute, the arbitrator, appointed by an interim order of the president (the judge) of the Paris Tribunal of Grande Instance, referred by INSERM, rendered an award on 4 May 2007, under the terms of which he dismissed INSERM’s claim for payment and ordered it to reimburse to the fund the sum of 304,878.03 euros with interest; that INSERM simultaneously filed an appeal with the Marseille administrative court of appeal and with the Paris court of appeal with an action for annulment against the arbitral award; that the contested judgment (Paris, 13 November 2008) dismissed the appeal; that for its part, having been seized of the request initially presented to the administrative court of appeal, the Conseil d’Etat referred to the Tribunal des conflits the question of whether or not the action brought by INSERM fell within the jurisdiction of the administrative court; that by decision of 17 May 2010, the Tribunal des conflits ruled that the judicial court had jurisdiction to hear the action for annulment brought by INSERM;

On the second ground, which is preliminary:

Whereas the INSERM complains that the judgment characterised the arbitration as international, then, according to the ground:

1°/ that arbitration is international only if it implicates the interests of international trade; that the financing by a foreign fund of the construction of a building in France, whose project management is entrusted to a public establishment of scientific nature, and whose purpose is to host a medical research centre dependent on the said establishment, constitutes an operation unrelated to international trade and not likely to implicate the interests of the latter; that the court of appeal thus violated, by false application, article 1492 of the Code of Civil Procedure;

2°/ that a movement of funds coming from abroad does not, by itself, implicates the interests of international trade; that by merely noting that the contract provided for the payment, in France, of funds from the Norwegian fund, without characterising the involvement of the interests of international trade, the court of appeal violated Article 1492 of the code of civil procedure;

3°/ that moreover, the will of the parties having no incidence on the characterisation of the arbitration as an international arbitration, by referring to the statements made by the parties before the interim judge and in the terms of reference, the court of appeal violated Article 1492 of the Code of Civil Procedure;

4°/ that finally, the res judicata effect only takes place with regard to what is the subject of a judgment and has been decided in its operative part; that by relying on the finding, within the terms of the order of the president (judge) of Tribunal of Grande Instance, according to which the parties would have agreed on the international nature of the arbitration, the court of appeal violated article 1351 of the civil code;

But whereas, after having rightly stated that according to article 1492 of the code of civil procedure, arbitration involving the interests of international trade is international, and that the internationality of arbitration is based on an economic definition according to which it is sufficient that the dispute submitted to the arbitrator relates to a transaction that is not economically settled in a single State, and this, independently of the status or nationality of the parties, the law applicable to the merits or to the arbitration, or the seat of the arbitral tribunal. The court of appeal retains that the purpose of the memorandum of understanding was to gather the efforts of INSERM and the fund “to promote the realisation of a project for the construction of a research pole in neurobiology and the training of clinicians and researchers in this field” with funding for the most part by the fund, which implied the movement of funds from the Norwegian fund across borders; that, for this reason alone, it decided that the arbitration was international; that the ground was unfounded ;

On the first ground, taken in its two parts, hereafter annexed:

Whereas the INSERM complains that the decision refused to adjourn the ruling on the preliminary question relating to the validity of the arbitration clause stipulated in the administrative contract concluded between the INSERM and the fund. INSERM also complains that the decision declared this clause valid and dismissed the action for annulment against the arbitral award;

Whereas the Tribunal des conflits, in its decision of 17 May 2010, ruled that the court had jurisdiction to hear the action for annulment, whereas the ground became irrelevant ;

FOR THESE REASONS:

DISMISSES the appeal;

Orders INSERM to pay the costs;

In view of Article 700 of the code of civil procedure, dismisses INSERM’s request and orders it to pay the foundation the sum of EUR 3,000;

Thus concluded and judged by the Court of Cassation, First Civil Chamber, and pronounced by the chairman in his public hearing of twenty six January two thousand eleven.