Paris Court of Appeal, No. 10/10078 10/10484

Paris Court of Appeal, Pole 1 - Chamber 1, 12 May 2011, No. 10/10078 10/10484

ACCOR S.A.S vs. INTERTRAFF S.A.R.L

On 10 January 2006, INTERTRAFF and ACCOR entered into a distribution agreement under the terms of which the latter undertook to acquire and distribute certain products of the former, with an arbitration clause inserted in the contract, under the supervision of the International Court of Arbitration of the Brussels Chamber of Commerce.

The company INTERTRAFF accused its distributor of not having fulfilled its obligations and referred the matter to the International Court of Arbitration of the Brussels Chamber of Commerce.

Following the award of 31 March 2009, the sole arbitrator, Mr Z A, ordered ACCOR to pay INTERTRAFF the sum of €314,000 in addition to the Italian legal interest from the date of the award and €5,000 as reimbursement of arbitration costs.

In a decision dated 27 May 2009, the delegate of the President of the Paris Tribunal of Grande Instance granted enforcement to the arbitral award through an exequatur procedure.

ACCOR was placed in receivership by decision of the Paris Commercial Court on 8 September 2009, which appointed Mr. Y as court-appointed receiver and Mr. X as director.

ACCOR, Mr Y and Mr X in their capacity, appealed against the decision of exequatur of the arbitral award and, by submissions dated 20 January 2011, sought its annulment on the grounds that it is contrary to international public policy and requested that INTERTRAFF be ordered to pay them the sum of €3,000 under Article 700 of the Code of Civil Procedure.

INTERTRAFF considers that the appeal should be dismissed and requests the confirmation of the enforcement decision and the dismissal of INTERTRAFF’s claim against ACCOR’s liabilities of €314,000 in addition to the Italian legal interest of 8% from the date of the award until the judgment opening the insolvency proceedings. It also requests €5,000 to reimburse its arbitration costs and requests a declaration from INTERTRAFF, which is in liquidation, that it does not intend to proceed with forced execution in the current situation of the receivership proceedings. It explains that the purpose of the enforcement application is not to order ACCOR and that the enforcement decision is not contrary to Article L622-21- I-1° of the French Commercial Code.

UPON WHICH

Considering that it is appropriate for the proper administration of justice to order the joinder of proceedings registered under numbers 10/10078 and 10/10484;

On the sole ground: the recognition or enforcement of the award is contrary to international public policy (Article 1502-5 of the Code of Civil Procedure)

ACCOR, Mr. Y and Mr. X, in their capacity, firstly claim, that the arbitration award was made in violation of international public policy because the arbitration proceedings were initiated by INTERTRAFF, represented by Mr. B C, managing director, whereas the company was put into voluntary liquidation on 12 December 2007, prior to the initiation of the arbitration proceedings; from that date, only the liquidator acting under a special mandate had the capacity to commit INTERTRAFF;that “the summons issued at the request of a person identified in the proceedings as the representative of a legal person that it no longer had” is null and that this procedural irregularity is incompatible with the French concept of international public policy.

The claimants argue, secondly, that the challenged enforcement decision authorises the enforcement of the arbitral award rendered on 31 March 2009, which orders ACCOR to pay, whereas the principle of the universality of bankruptcy and specifically the provisions of Article L622-21 of the Commercial Code establishes the principle of the suspension of any legal action or proceedings intended to order the debtor to pay a sum of money, and the claimants add that authorising INTERTRAFF to pursue the enforcement of the arbitration award would entail disregarding the rule of equality of creditors; that the pursuit of the enforcement of that decision is contrary to international public policy.

Considering that according to Article 1498 of the Code of Civil Procedure, arbitral awards are recognised in France if their existence is established by the person claiming them and if this recognition is not manifestly contrary to international public policy and under the same conditions they are declared enforceable in France by the enforcement judge; that according to Article 1502-5 of the Code of Civil Procedure, the appeal of the decision granting recognition or enforcement is available only if the recognition or enforcement is contrary to international public policy;

Considering, under its second part, that the principle of suspension of individual proceedings as regards bankruptcy proceedings is both a matter of domestic public policy and of international public policy; that since ACCOR was placed in receivership on 8 September 2009, the enforcement of the award authorised by the order subject to appeal is contrary to international public policy insofar as it infringes the mandatory rules of insolvency law. The fact that INTERTRAFF is requesting that it be recorded that it does not intend to proceed with the enforcement given the state of the receivership proceedings is in this respect irrelevant. As a result, it is appropriate to reverse the undertaken order and to reject the application for the enforcement of the arbitral award;

Moreover, it does not fall within the powers of the enforcement judge to modify the international arbitration award by “acknowledging” the claim of INTERTRAFF within the liabilities of the company ACCOR, as requested by the company INTERTRAFF;

On other requests

Considering that the company INTERTRAFF is ordered to pay the costs and its request formed under Article 700 of the Code of Civil Procedure is rejected; that equity does not require the application of these same provisions for the benefit of the company ACCOR, Mr. Y and Mr. X in their respective capacity;

FOR THESE REASONS,

Orders the joinder of the proceedings registered under numbers 10/10078 and 10/10484,

Reverses the enforcement order of the President of the Paris Tribunal de Grande Instance,

Rejects the application for exequatur of the arbitral award rendered on 31 March 2009,

Rejects all other requests,

Orders the company INTERTRAFF represented by its liquidator Mr. B C to pay the costs and admits the SCP BAUFUME GALLAND VIGNES, lawyer, as beneficiary of article 699 of the Code of Civil Procedure.

THE CLERK THE PRESIDENT