Court of Cassation, No. 10-14.687 | Rory Wheeler, avocat (Paris) & solicitor (England)

Court of Cassation, First Civil Chamber, 12 October 2011, No. 10-14.687

GROUPE ANTOINE TABET

vs.

REPUBLIC OF CONGO

THE COURT OF CASSATION, FIRST CIVIL CHAMBER, delivered the following judgment:

On the first and second grounds, taken in all their parts:

Under articles 1502-3 and 1502-4, and 1504 of the Civil Procedure Code;

Whereas the Lebanese company Groupe Antoine Tabet (GAT), which finances public works, particularly in Africa, signed financing agreements with the Republic of Congo in 1992 and 1993. The Republic of Congo entrusted an oil company to pay the instalments of the loan, a mission accepted by the oil company. A dispute has arisen because the Republic of Congo considered that it had paid too much. The oil company, which stopped paying, was ordered by the Swiss judicial courts to pay GAT a sum of more than 64 million Swiss francs. These decisions were declared enforceable in France and the appeals were rejected by two judgments of 4 July 2007 (05-14,918, 05-17,433 and 05-16,585). At the same time, the Republic of Congo initiated arbitration proceedings in Paris, under the supervision of the International Chamber of Commerce (ICC), requesting reimbursement by GAT of sums paid, in its view, without cause. In a first award dated 30 March 2000, the arbitral tribunal ruled on its jurisdiction. In a second award of 4 June 2002, the arbitral tribunal stated, inter alia, that interest should be paid, the parties having to calculate it within a certain period and ordered the Republic of Congo to pay a sum in excess of 16 million euros, without penalty. The judgment of 14 May 2009 which dismissed GAT’s action for annulment is the subject of appeal No. S 09-66.567. A third award of 8 December 2003, ordering GAT to pay into an escrow account any sums that might be paid to it by the oil company in excess of the 16 million euros provision, was the subject of an action for annulment rejected by the Paris Court of Appeal on 11 May 2006. By procedural order of 11 December 2003, the chairman of the arbitral tribunal ordered GAT, pending signature of the escrow agreement, to deposit the sums paid in excess of 16 million euros to the President of the Bar. GAT’s action for annulment was dismissed by judgment of 29 October 2009, under appeal No. Z 09-72.439. In a fourth award dated 27 February 2008, the arbitral tribunal dismissed the application for partial withdrawal of award no. 2. It also ruled that the balance of the account resulting from the payments made in execution of agreement No. 569 gave entitlement to interest at the contractual rate of 10% until 31 December 2004, and beyond to interest of 4.5%. It stated further that in compensation for the damage caused to the Republic of Congo by the non-execution of the provisional measures ordered by the third award, GAT would be deprived of the benefit of interest in the amount of 449,889.30 euros;

Whereas, in order to state that the arbitrators were able, without disregarding their mission or violating due process (in French Principe de contradiction), to set the interest rate relating to agreement No. 569 at 4.5% as of 31 December 2004, the judgment holds, first, that the arbitrators ruled in accordance with the general principles of French contractual law, by seeking the common intention of the parties who had intended to limit the period to nine years, in addition to the eighteen-month deferred, the application of the contractual rate of 10%, and then, that the parties concluded on the question of a date beyond which the contractual interest rate of 10% per annum would no longer be applied in a way the limitation in time of the rate of interest at 10% per annum and the principle of a reduction of the interest rate beyond a date yet to be determined were in a panel discussion;

That in so ruling, on the one hand, that the parties were able to provide their observations on the rate of interest possibly applied and, on the other hand, that the judge, except in the case of article 1244-1 of the Civil Code, can, even after maturity, reduce the conventional rate of interest only to the amount of the legal interest so that, by fixing it at 4.5% the arbitrators necessarily acted as conciliators, the Court of Appeal violated the above-mentioned texts;

FOR THESE REASONS and without the necessity to rule on the other grounds:

REVERSE AND ANNUL, in its entirety, the judgment handed down on 14 January 2010 between the parties by the Paris Court of Appeal; return, consequently, the proceedings and the parties to their status quo ante and, for the proceedings to be determined in accordance with law, transmit them to the Versailles Court of Appeal;

Orders the Republic of Congo to pay the costs;

Pursuant to article 700 of the Civil Procedure Code, order the Republic of Congo to pay the company GAT the sum of 3,000 euros;

States that based on the diligences of the public prosecutor at the Court of Cassation, the present judgment will be transmitted to be transcribed in the margin or following the overturned decision;

Thus done and judged by the Court of Cassation, First Civil Chamber, and pronounced by the President at a public hearing on 12 October 2011.