Paris Court of Appeal, No. 11/06269 | Rory Wheeler, avocat (Paris) & solicitor (England)

Paris Court of Appeal, First Pole, First Chamber, 29 September 2011, No. 11/06269 11/10723

Mr. L X

Vs.

S.A.S.U. P Q (FIM’S)

By award rendered in Paris on 31 March 2010, the ad hoc arbitral tribunal, composed of Messrs. K and I, arbitrators, and Mr. K, President, ruling in the last resort, liquidated at 30,000 € in addition to VAT, the fees and expenses of the arbitration and said that each party shall pay half of this amount.

By an award for rectification of material error notified by letter dated 25 March 2011, the arbitral tribunal rectified the material error relating to the amount of costs and fees, which was liquidated in the sum of 60,000 € excluding taxes.

By a new award, notified by letter dated 18 May 2011, the arbitral tribunal has rectified the material error relating to the costs and fees of the arbitrators, which has been liquidated in the sum of € 60,000 excluding taxes.

On 1 April and 7 June 2011, Mr. X, Mrs. C, Mr. Z, Mr. Y and the company 91346-7997 QUEBEC inc. filed an appeal against each of these awards registered under numbers 11/06269 and 11/10723.

By submissions of 7 and 16 June 2011, they seek the annulment of the awards notified on 25 March and 18 May 2011 and request, on the one hand, not to rectify any material error, that consequently, they are admissible and entitled to obtain the restitution of the overpayment made by the arbitrators in excess of the global sum of 15,000 € exclusive of tax other than VAT, and on the other hand, to declare that there is a need to repair the failure to rule, and to hold FIM’S, now P Q, liable for a failure to comply with its obligation of consistency, which constituted a fault whose damaging consequences must be repaired, to set the amount of the said compensation at the difference observed between the transfer price finally decided either in the award of 31 March 2010, or in the decision to be taken after the award has been annulled, with the agreed price of 1,240,000 €, to consequently order P Q to pay the sellers, up to the amount of the share it held in the capital sold, the sum of 1,240,000 € in cash or receipts, to order P Q (formerly FIM’S) to pay them 30,000 € in damages for abusive resistance on the basis of article 1382 of the civil code, in addition to 10,000 € under article 700 of the code of civil procedure.

The appellants argue that the arbitrators ruled without complying with their mission, on the basis of Article 1492-3 of the Code of Civil Procedure, and that the first amending award is neither dated nor signed while the second is not dated, on the basis of Article 1492-6 of the same code.

By submissions of 27 May and 16 June 2011, the company P Q (FIM’S) requests to establish the internal nature of the arbitration, to note that the award for rectification of a material error notified on 25 March 2011 was not signed by the arbitrators, to note that the conclusive party defers to the Court’s wisdom the consequences of this situation with regard to the possible annulment of the said award as well as the liquidation of the arbitral board’s fees, and to state that in the event of liquidation of the arbitration fees in the sum of 30,000 € exclusive of tax, it is admissible and entitled to obtain the restitution of the excess received by the arbitrators in excess of the sum of 15,000 exclusive of tax, plus VAT, to declare the appellants inadmissible in their application to annul the award of 31 March 2010 by declining the application to set aside the award for rectification of a material error of 25 March 2011, itself based on the failure to rule, to dismiss the appellants' claims and to order them to pay the sum of 5,000 € pursuant to Article 700 of the Code of Civil Procedure.

UPON WHICH

On the consolidation

Whereas it is advisable for the proper administration of justice to order the consolidation of the proceedings enlisted under numbers 11/06269 and 11/10723;

On the qualification of arbitration

Whereas by today’s judgment, the Court held that the arbitration is international;

On the grounds for annulment concerning the date and signature of the rectification award notified on 25 March 2011 and concerning the date of the rectification award notified on 18 May 2011

Whereas Articles 1471 and 1472, which have become Articles 1480 and 1481 of the Code of Civil Procedure, are applicable in matters of international arbitration by virtue of the new Article 1506 of the same Code;

Whereas, however, it follows from the provisions of Article 1502, now Article 1520 of the Code of Civil Procedure, that the critiques concerning the date and signature of the arbitral award do not constitute grounds for initiating an action for annulment in international arbitration;

That the annulment requested on these grounds should be dismissed

On the ground for annulment taken from the disregard by the arbitrators of their mission (Article 1520-3 of the Code of Civil Procedure)

The claimants complain that the arbitrators have ruled on a rectification of a material error that was not referred to them and, in any case, that they have not ruled on the claim for compensation for failure to rule.

Whereas, on the first branch of the ground of appeal, if the award relieves the arbitrator of the dispute it decides, the arbitrator nevertheless has the power to interpret the award, to correct material errors or omissions that affect it and to supplement it when he has failed to rule on a ground of claim;

Whereas, by summoning the parties once again to a hearing on 27 January 2011 so that the question of the quantum of the arbitration costs may be raised, the arbitrators have not disregarded their mission, it being observed that whether or not the rectification of a material error is well-founded is a question of substance that the judge in charge of the annulment does not need to deal with;

Whereas, on the second branch of the ground, the claimants reiterate the ground of annulment that they raised against the main award with regard to the failure to rule on the breach of the obligation of consistency of P Q (FIM’S);

Whereas it is up to the claimants to refer the matter to the arbitrators again, if they consider it useful;

That the ground for annulment based on the disregard by the arbitrators of their mission is dismissed;

On the other claims

Whereas, considering what has been decided above, the other claims are dismissed;

Whereas there is no need to apply Article 700 of the Code of Civil Procedure;

FOR THESE REASONS,

Pronounces the junction of the procedures registered under numbers 11/06269 and 11/10723;

Dismisses the actions for annulment of the rectification awards rendered in Paris by the arbitral tribunal notified respectively by letters dated 25 March 2011 and 18 May 2011;

Dismisses all other claims;

Condemns Mr. X, Mrs. C, Mr. Z, Mr. Y and the company 91346-7997 QUEBEC inc. to pay the costs and admits the SCP HARDOIN avowed, for the benefit of article 699 of the Code of Civil Procedure.