Court of Cassation, No. 10-23.321

Court of Cassation, First Civil Chamber, 29 June 2011, No. 10-23.321

OVERSEAS MINING INVESTMENTS LIMITED

vs.

COMMERCIAL CARIBBEAN NIQUEL

On the sole ground:

Whereas, by award of 10 October 2008, an arbitral tribunal ruling under an arbitration clause contained in the contract between the Overseas Mining Investments Ltd (OMI), incorporated under the law of Jersey, and the Cuban company Commercial Caribbean Niquel SA (CCN), in which CCN was ordered to pay to OMI a certain amount in damages, whereas the CCN company brought an action for annulment of that award;

Whereas OMI objects to the judgment under appeal (Paris, 25 March 2010) for setting aside the award; according to the ground of appeal (in French: moyen du pourvoi) that an arbitrator does not raise any grounds ex officio, where, assuming the parties are invited to submit their observations, he compensates a loss of opportunity pro rate at a fraction of the loss for which compensation was sought by one of the parties. The Court of Appeal found that OMI sought compensation for the lost gain resulting from the faults committed by CCN and that the arbitral tribunal ruled that it should “be compensated for the loss of opportunity to continue the project”, on the ground that “the possible economic benefit” that was “‘lost cannot be measured with certainty, but the loss of chance of gaining it can undeniably be assessed” and that “compensation for loss of chance is based on the prediction not that the victim of the damage should be compensated for the lost gain he or she claims, but, on the contrary, that it should be for the economic value of the lost chance”. It follows that the arbitrators reduced the compensation for the lost gain sought by OMI to the loss of chance of making a gain from the economic transaction. As such, the compensated damage is not of a different nature from that for which compensation was sought. In ruling as it did, the Court of Appeal violated the provisions of Articles 1502-4 and 1504 of the Code of Civil Procedure;

However whereas the decision exactly states that, in their reasoning, the arbitrators substituted the claimed compensation by OMI based on the loss of gain, which they considered inadequate, with compensation based on the loss of opportunity of seeing the project materialise, which OMI did not invoke, and that this substitution did not constitute a simple method of assessing the damage, but modified the basis of OMI’s compensation; that the Court of Appeal rightly inferred that by failing to invite the parties to submit observations themselves on this point, the arbitrators had disregarded due process (in French: principe du contradictoire); that the ground is unfounded;

FOR THESE REASONS:

DISMISSES the appeal;

Orders OMI to pay the costs;

In view of article 700 of the Code of Civil Procedure, orders the OMI company to pay a compensation of 4,000 euros to the CCN company; dismisses the surplus of the claims.

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