Paris Court of Appeal, No. 10/06953 | Rory Wheeler, avocat (Paris) & solicitor (England)

Paris Court of Appeal, Pole 1, First Chamber, 21 February 2012, No. 10/06953

SPRL PILOT PROJECT GAROUBE vs. THE REPUBLIC OF CAMEROON

On 14 November 2001, a lease contract was concluded between the STATE OF CAMEROON (CAMEROON) and the Cameroonian company D E X for the breeding of wild fauna in a protected area of hunting interest of 40,000 ha in the North of the B.

Following changes in its capital, the SARL D E X was transformed into a limited liability company under Belgian law SPRL PILOT PROJECT GAROUBE (GAROUBE) and its registered office transferred to BELGIUM.

On 13 November 2007, GAROUBE, invoking the abusive termination of the lease agreement and the hindrance placed by B to the valuation of its business and assets, filed a request for arbitration with the International Chamber of Commerce on the basis of the arbitration clause stipulated in the contract of 14 November 2001.

In a partial award handed down in Paris on 16 February 2010, the arbitral tribunal composed of Mr Z and Mr Y, arbitrators, and Mr Poncet, Chairman, set aside the various grounds for dismissal, accepted the continuity of GAROUBE’s legal personality, noted the existence of an arbitration clause binding the parties, retained jurisdiction and, by a majority, ordered B to pay GAROUBE the sum of 157,990.13 euros in respect of the costs incurred at this stage of the proceedings, in addition to interest.

The CAMEROON appealed against this award on 26 March 2010 (registered under No. 10/06953).

In its submissions of 6 January 2012, the Republic of Cameroon requests the annulment of the award and that X be ordered to pay it the sum of 20,000 euros pursuant to Article 700 of the Code of Civil Procedure. It claims that the arbitral tribunal was improperly constituted (Article 1520-2 of the Code of Civil Procedure), that it wrongly declared it had jurisdiction (Article 1520-1 of the Code of Civil Procedure), that it disregarded the terms of its mission (Article 1520-3 of the Code of Civil Procedure) and violated due process (in French Principe de la contradiction) (Article 1520-4 of the Code of Civil Procedure), and finally, that the recognition or enforcement of the award is contrary to international public policy (Article 1520-5 of the Code of Civil Procedure).

In its submissions of 12 January 2012, GAROUBE requests the Court to declare the ‘appeal/annulment’ inadmissible on the grounds of delay, and in the absence of an articulation of one of the grounds listed exhaustively in Article 1520 of the Code of Civil Procedure, to declare that the ground of appeal relating to the independence of the arbitral tribunal was filed out of time. It also requests the Court to exclude from the proceedings the claimant’s exhibits numbered 3, 5, 11, 12, 19, 22, 27 to 29, 31, 33, 71, 91, 93 and 94 and to set aside from the proceedings various allegations of adverse findings classified as defamatory. In the alternative, it requests the Court to rule that the action was unfounded and, in the further alternative, to reduce the annulment to one part of the sentence in paragraph 28 of the operative part of the award and, in any event, to order the B to pay the sums of 50. 000 euros in compensation for the damage caused by slanderous accusations,30,000 euros in compensation for abusive proceedings and 40,000 euros pursuant to Article 700 of the Code of Civil Procedure.

On 27 September 2010, in the same proceedings, the arbitral tribunal composed of Messrs. Z and Y, arbitrators and Mr. Poncet, Chairman, issued an ‘Addendum to the partial award on jurisdiction of 16 February 2010", which was object to an action of annulment formed by the CAMEROON on 20 December 2010 (registered under no. 10/24658).

In its submissions of 6 January 2012, the CAMEROON requests the annulment of this addendum as well as to order X to pay for it the sum of 10,000 euros in application of Article 700 of the Code of civil procedure.

In submissions dated 12 January 2012, X reiterates the claims and grounds developed in the submissions taken in the partial award and alternatively, requests the Court to limit of the annulment to the operative paragraph 28 of the addendum, otherwise to Resolution No. 28 of this resolution addendum.

UPON WHICH :

Given that it is in the interest of the proper administration of justice to join the appeals registered under numbers 10/06953 and 10/24658;

On the plea of inadmissibility arising from the late submission of the claimant :

Given that the legal remedies to which a court decision is subject are governed by the texts in force on the date of the decision; that it follows that the provisions governing the time limits for appealing against the partial award handed down on 16 February 2010 are not those of Article 1519 of the Code of Civil Procedure in force since 1 May 2011, but those of Article 1505 of the same code, as amended by Decree No. 81-500 of 12 May 1981, under the terms of which: “An action to set aside as provided for in Article 1504 shall be brought before the Court of Appeal of the place where the award was made. Such action can be had as soon as the award is rendered. If no application is made within one month following notification of the award, action shall no longer be admissible”;

Given that the partial award was declared enforceable by an order of 10 March 2010; that the action brought on 26 March 2010 is therefore not late; that, moreover, it is not alleged that the award subject to enforcement (in French Exequatur) has been served, so that the aforementioned time limit has not even begun to run, regardless of the notification made to the parties by the General Secretariat of the International Court of Arbitration of the International Chamber of Commerce

Given that the addendum not having been enforceable yet, the deadline for claiming did not expire either;

That the plea of inadmissibility can therefore only be dismissed in respect of both claimants;

On the request to set aside certain passages of the CAMEROON submissions:

Considering that the extracts of the submissions of CAMEROON incriminated by GAROUBE consist in the imputation of fraudulent manoeuvres; that since fraud constitutes a ground for initiating an action for annulment, these statements, which in no way exceed the freedom of expression which is attached to the exercise of the rights of defence, cannot be censored;

On the ground of irregularity in the constitution of the arbitral tribunal (Article 1502-2 of the Code of Civil Procedure):

CAMEROON alleges the lack of independence and impartiality of Mr Z, the arbitrator appointed by GAROUBE.

GAROUBE replied that this ground is inadmissible for having been presented in new and untimely submissions of 5 October 2011; that the decision of the International Court of Arbitration of 28 July 2011 allowing the challenge of Mr. Z does not have retroactive effect on a previous award and that there are no elements prior to the partial award which would allow to doubt the independence of this arbitrator; that the lack of independence of an arbitrator allegedly occurring several months after the award cannot be analysed as an irregularity in the constitution of the arbitral tribunal and constitute a ground for annulment against the award; it only requires for the arbitral tribunal to be properly constituted in accordance with the agreement of the parties and the arbitration rules to which they have referred, which is the case here; that the question of the independence of an arbitrator may not be raised for the first time before the Court of Appeal without first having been submitted to the International Court of Arbitration, in accordance with the Rules of Arbitration of the International Chamber of Commerce, and then, where appropriate, to the supporting judge; that by virtue of the principle of estoppel, CAMEROON is deemed to have waived a ground which it did not raise during the proceedings prior to the award;that the facts relied on in support of the allegation of bias, namely the appointment of Mr. Lantourne as counsel for GAROUBE in May 2011 and a letter from Mr. Lantourne to Mr. ’s lawyer in May 2011 and a letter from Mr.Z dated 24 August 2010 are not sufficient to establish a criticism against the partial award; in any event, it only required for the award to be made that it be made by the president of the arbitral tribunal; that the president of the arbitral tribunal attested to the impartiality of his colleagues; that the lateness of the allegation of lack of independence was a complaint; that Mr Z’s declaration of independence concerning Mr Lantourne and his firm did not contain any substantial omission; that Mr Z’s comments on Mr Lantourne and his firm did not contain any substantial omission; that Mr Z’s comments on Mr Lantourne and his firm did not contain any substantial omission; that Z’s comments on arguments and exhibits in the action for annulment related exclusively to criticisms concerning him personally; that the various letters cited by CAMEROON, concerning in particular the arbitration costs, have been misrepresented; that the alleged lack of independence and impartiality has therefore not been established.

Given that, in the first place, there is no text that makes it mandatory for the claimant to formulate all of its grounds for annulment in a single statement submitted before the deadline for an action against an arbitral award; that, therefore, the action by the CAMEROON is not itself late and the ground of the dismissal drawn from the lateness of the irregularity ground of the composition of the arbitral tribunal can only be dismissed;

Moreover, this ground for annulment had been presented in submissions filed on 5 October 2011, three months before the closing date on 12 January 2012. This ground has also given rise to a number of detailed ripostes of GAROUBE on 19 December 2011 and on 12 January 2012. Thus, it cannot be claimed that due process (in French Principe de la contradiction) has been infringed;

Given that, in the second place, if any ground invoked against an award under the Article 1502-2 of the Code of Civil Procedure must, in order to be admissible before the annulment court, have been raised, whenever possible, in the course of the arbitration procedure, the ignorance of an cause of recusal during these proceedings does not could have the effect of depriving one party of the possibility to invoke it later before the court of the regularity of the award to which is associated the control of the independence requirement and impartiality of the arbitrators, notwithstanding the procedural rules for challenge, set, where appropriate, by the arbitration rules;

Given that, in the third place, independence of spirit is essential to the exercise of power, whatever the source, and is one of the essential qualities of the arbitrators;

Given that in the present case, GAROUBE addressed on 28 July 2010 at the International Court of Arbitration a letter which, on the one hand, challenged the ability of the president of the arbitral tribunal to hear the case in the reasonable time and requested his replacement. On the other hand, GAROUBE requested that it be suspended for any decision to make a new provision at its own expense; that the International Arbitration Court invited the members of the arbitral tribunal to comment on that letter; that Mr. Y, the arbitrator appointed by CAMEROON, limited himself to find that the length of the procedure were attributable to the numerous incidents caused by the parties and that they justified the fixing of a additional provision that had to be charged in accordance with the provisions of the arbitration rules, for his part, Mr. Z, an arbitrator chosen by the X, expressed himself in the following terms in a letter of 2 August 2010 :

The arbitral tribunal must ensure in this case:

the equality of arms, the imbalance between the two parties being flagrant: on the one hand, a State which has considerable financial administrative and legal ground, on the other hand a small or medium-sized firm,
the performance of procedural acts in the proceedings in the time limits.

On the first point, the fact that the defendant is the State places it, in relation to its opponent, in a position no more difficult than that of a commercial operator, but on the contrary manifest superiority: the Republic of CAMEROON has, like the arbitral tribunal has been able to ascertain, a number of qualified lawyers who are perfectly familiar with the file and agents capable to carry out all kinds of investigations and findings.

On the second point, by procedural order No. 7 dated 5 May 2010, the arbitral tribunal invited both parties to conclude on the merits on 15 June 2010.

At this stage of the proceedings, the defendant did not have to ‘respond’ to the claimant submissions, but to reveal the arguments and grounds on which it intends to rely on in support of its claims. The both parties have long been aware of the specificities of the dispute.

The claimant implemented this decision by 23 June 2010 at the latest, not taking into account the filing date of 15 June 2010 of a statement of case which it subsequently withdrew, while the defendant requested “a deadline of 15 October 2010 for filing its statement of defence”.

It took two years of proceedings, with numerous incidents, to reach a partial award on 16 February 2010, which rejected the plea of lack of jurisdiction raised by the defendant, against which the latter filed an action for annulment currently pending before the Paris Court of Appeal.

The defendant has refrained for two years from making a decision on the merits and has only raised procedural grounds.

The defendant’s request for a time limit to file its statement of case on the merits caused the proceedings to be further lengthened by several months, which will inevitably further complicate the proceedings.

II – NOTICE

1 - There is no doubt that it is necessary to rapidly put an end to the errors that this arbitration is experiencing.

2 - The Arbitral Tribunal requested the International Court of Arbitration to invite the defendant to communicate its submissions in the action for annulment in order, in particular, to enable the Arbitral Tribunal, which has the obligation to fully and objectively investigate the case, to determine the knowledge that the defendant’s new counsel could have of the case when it requested a four-month period for the filing of its submissions. It is therefore appropriate to remind the defendant of this request, to invite him to inform the Court whether he has filed his submissions in the action for annulment and, if so, to communicate them urgently.

3 - It is clear from the letter exchanged on July 2, 9, 15 and 16, 2010 by the claimant’s counsel and the chairman of the arbitral tribunal, which was regularly communicated to the defendant’s counsel and to the other members of the arbitral tribunal, that “the arbitral tribunal, if it declares that it has jurisdiction in the first partial award, will rule in a second partial award on the principle of liability for breach of contract, as well as on the classification of this breach and on the components of the damage”.

These provisions, which are, moreover, customary, are an integral part of the mission statement and the must take full effect.

4 - The request for an additional advance on costs to cover the fees and disbursements that will be due to the arbitrators is fully justified.

The International Court of Arbitration could not, pursuant to the Rules, charge the defendant with the totality of this advance, since the award provided for in the partial award of 10 February 2010, which requires the Republic of Cameroon to pay the claimant the sum of 155,990 euros, has not been executed. In the absence of provisional enforcement and if this advance was to be paid by both parties in equal shares, it would appear equitable, in the light of the foregoing, to invite the defendant to pay its share and to authorise the claimant to suspend payment of its share until the Paris Court of Appeal delivers its judgment, to intervene in the action for annulment’;

Considering, on the one hand, that this statement of facts, which blames Cameroon for the slowness of the arbitral proceedings, is contradicted by an objective examination of the vicissitudes of the proceedings; that it results, in fact, from the statements in the award that the arbitral tribunal was constituted on 15 April 2008, X took the initiative in May 2008 to request the arbitrators to decide the dispute in two phases and not in a single award (§ 17); that it first changed its legal counsel in June 2008 (§ 22) and again in December 2008 (§ 51), that in January 2009 it requested the challenge of the chairman of the arbitral tribunal on the ground that he was on a first-name basis with arbitrator Pinsolle (§ 59), following which the latter resigned and was replaced in March 2009 by Mr Y (§ 66), and, lastly, while CAMEROON filed its submissions late, GAROUBE increased the number of unsolicited and untimely submissions of written documents and documents (§§ 18, 42, 57, 76 and 79);

Given that, on the other hand, following the decision of GAROUBE to be assisted by a new counsel, Me Lantourne, and the declaration of independence subscribed on this occasion by Mr. Z on 25 May 2011, the International Court of Arbitration, by a non-reasoned decision dated 28 July 2011, admitted the request for recusal of Mr. Z, made by the Republic of Cameroon; that as of 1 September 2011, the fees of Mr. Z have been set by the International arbitration Court at USD 23,000; that X, who until then had not ceased to raise objections to requests for advance payment of arbitration costs, has, by a letter dated 6 September 2011, requested the increase in the amount of fees for the period from the date of the partial award up to 1 September 2011; that such a request should not be made before could be used for other purposes than to increase the share of the Mr Z, who was excluded from the proceedings on that date;

Considering that the bias reflected in Mr. Z’s letter of 2 August 2010 and the readiness of X to favour the material interests of the arbitrator it chose are such as to give rise in the mind of Bun to legitimate doubts as to the independence and impartiality of the latter, of little importance, in this respect the feeling expressed by the Chairman with regard to the impartiality of the two other members of the Arbitral Tribunal;

Considering that if Mr. Z’s letter of 2 August 2010 and GAROUBE’s letter of 6 September 2010 are subsequent to the challenged award, they are indicative of pre-existing links which justify that they should be taken into consideration for the assessment of the validity of that award;

Considering, finally, that the proceedings were initiated before a panel of three arbitrators, the arbitrator whose bias is suspected was able to exercise his influence both on the conditions under which the proceedings were conducted and on the opinion of his colleagues during the deliberations; that it follows that the ground that the legal effectiveness of the award is not subject to the agreement of all the arbitrators and that it could

Given that it follows from all the foregoing that the partial award must be set aside for irregularity in the composition of the arbitral tribunal;

On the application for the annulment of the addendum :

Given that the annulment of the award entails consequently that of the addendum - issued by the same course - which is designed to interpret and modify it;

On request for exhibits to be excluded from the proceedings :

Given that it follows from the meaning of the present judgment that that there is no need to decide on this application;

On the claim for damages under the slanderous accusations

Given that such a request is not admissible before the court of appeal seized pursuant to Articles 1502 and 1504 of the Code of Civil Procedure;

On the claim for damages for abusive proceedings:

Given that the action for annulment was granted, the application based on the abusive nature of this claim can only be rejected;

On applications made pursuant to Article 700 of the Code of Civil Procedure :

Given that X who succumbs cannot claim for the benefit of article 700 of the code of civil procedure that it will have to pay to CAMEROON on this basis the sum of 20,000 euros;

FOR THESE REASONS:

Orders the consolidation of the claimants registered under the numbers 10/06953 and 10/24658.

Declares the appeal admissible.

Sets aside the award issued between the parties on 16 February 2010 and the addendum of 27 September 2010.

Rejects the applications of SPRL PILOT PROJECT GAROUBE.

Orders SPRL PILOT PROJECT GAROUBE to pay to the STATE OF CAMEROON the sum of 20,000 euros in application of Article 700 of the Code of Civil Procedure.

Orders SPRL PILOT PROJECT GAROUBE to pay the costs and admits the CPC Monin d’Auriac de Brons for the benefit of the article 699 of the Code of Civil Procedure.