Paris Court of Appeal, No. 10/23578

Court of appeal Paris, 1st Pole - 1st chamber - 20 March 2012, n° 10/23578

S.A.S. A.D.B. vs. Société REO INDUCTIVE COMPONENTS AG

The German company B INDUCTIVE COMPONENTSAG (B) produces and distributes electronic components.

The Belgian company N V Y SA signed a technical cooperation agreement with B on September 28, 1990, written in German.

The French company Y SOFAIR, now Y SAS, a subsidiary of the Belgian company N V Y SA, signed a framework agreement with B on the same day for the supply of rheotors, known as the OEM agreement, written in French.

On 22 April 2009, an arbitral award was rendered in Solingen (Germany) by the arbitral tribunal composed of Mr. J. K. S., chairman and Mr. A-R C. and X, arbitrators, ordering Y to pay various sums to B. By order of 10 September 2010, the delegate of the president of the Tribunal de Grande Instance of Paris declared enforceable the arbitral award of 22 April 2009,

In view of the appeal and the submissions of 8 December 2011, Y requests the court, pursuant to Article 1505 of the Code of Civil Procedure, to withdraw this order of enforceability and to order B to pay it EUR 5,000 pursuant to Article 700 of the Code of Civil Procedure;

In view of the submissions of 12 January 2012, B requests, as a principal claim, that the court find Y inadmissible both in its initial application for annulment of the arbitral award and in its application for withdrawal of the enforcement award, and, as a subsidiary claim, to the rejection of all the unfounded requests and, in any event, to order Y to pay it EUR 15,000 pursuant to Article 700 of the Code of Civil Procedure;

UPON WHICH;

Whereas, on 22 April 2009, an arbitral award condemning Y to pay various sums to B was rendered in Solingen (Germany); whereas this award was declared enforceable by an order of 10 September 2010 by the delegate of the President of the Paris District Court.

Y filed an action for annulment, and is now seeking the withdrawal of the enforcement order that has been issued; that, in pursuit of the annulment of the order that conferred enforceability on the arbitral award, the Court is in fact seized of an application for the reversal of this order; that the alleged inadmissibility of the application is dismissed:

On the first ground: The arbitral tribunal reached its decision in the absence of an arbitration agreement or on the basis of a void or expired agreement (article 1502-1, now 1520-1 of the Code of Civil Procedure)

Y invokes the existence of a jurisdiction clause in favor of a common law court in Annex 2 of the OEM contract and argues that the arbitration clause in paragraph 12 of the same contract designates an arbitral institution that had ceased to exist, even though the parties have not agreed in writing to the designation of another institution. Moreover, the arbitrators ruled on an erroneous clause, not having intervened at the signature of the technical cooperation contract concluded between N VY SA, a Belgian company and B. Considering that the court seized of an appeal against an order for the enforcement of an arbitral award, reviewed the decision of the arbitral tribunal on its jurisdiction by seeking all elements of law or fact that would allow it to assess the existence of the arbitration agreement.

Whereas the OEM contract signed by the parties contains an arbitration clause (paragraph 12) which reads as follows: “Any dispute arising out of or in connection with this contract or its validity shall be finally settled without recourse to ordinary legal proceedings in accordance with the Rules of Arbitration of the German Arbitration Commission. The arbitral tribunal may also decide imperatively on the validity of this arbitration agreement. The seat of arbitration shall be Solingen.”

Whereas, in the first place, the existence of an arbitration clause that deviates from the general terms and conditions of the contract cannot be called into question by the clause determining the competent jurisdiction in the General Terms and Conditions of Delivery in Appendix 2 of the OEM contract; whereas, furthermore, Article 5.2 of the contract relating to the respective orders stipulates that in the event of a contradiction between the provisions of this contract and the additional conditions, the former shall take precedence.

Whereas secondly, that the validity of the arbitration clause is not affected by the designation of an arbitration institution that no longer exists, whereas its successor may validly administer the dispute; that in the present case, the arbitration could validly take place under the supervision of the DIS institution which succeeded the German Arbitration Commission (DAS) initially designated by the parties; that the validity of the clause is not affected by the express reference it contains to an arbitration rule, in this case that of the German Arbitration Commission, which has become the DIS Arbitration Rules.

Whereas thirdly, the arbitrators cannot be held liable for having ruled on an erroneous arbitration clause when Article 11 of the technical cooperation contract they refer to is comparable to paragraph 12 of the signed OEM contract between Y and B and that the latter clause is also referred to by the arbitrators;

Whereas in the state of these elements, the tribunal is rightly declared competent; that the ground based on article 1520-1 is dismissed;

On the second ground: due process (in French: principe de contradiction) has not been respected (article 1502-4 which became 1520-4 of the code of civil procedure):

Y argues that the arbitration procedure was conducted in German when the contract was in French and that it does not understand German. Y claims from this that the language used by the arbitral tribunal did not allow her to understand the claims of B, in particular the technical details that were brought and to answer them within the time limit. Considering that due process (in French: principe de contradiction) requires that each party be put in a position to debate the facts of the case in a contradictory manner and that nothing that serves as a basis for the arbitrator’s judgment should be excluded from the contradictory debate of the parties;

Whereas Y, who has taken a position on the language of the proceedings within the period of time fixed by the arbitral tribunal, did not express its disagreement with the draft of the first procedural decision addressed to the parties by the arbitral tribunal on 3 April 2008 within the period of time expiring on 10 April 2008;

Whereas on 14 April 2008, the arbitral tribunal decided that the language of the proceedings shall be German and fixed the time limits for a statement of defense, a reply and a rejoinder; that on 12 and 22 January 2009, the parties to the arbitration agreed in writing on a decision taken on the basis of written pleadings; that if, when the arbitral tribunal drew up the list of costs requested by the arbitral tribunal on 6 February 2009, Y argued that the list of B’s fees of 4 March 2009 was late and disputed its accuracy, it was given until 22 March to provide its final position on the costs of the proceedings, a deadline which was extended to 30 March at the request of the parties;

Whereas Y cannot rely on the deficiencies in its defense noted by the arbitral tribunal, claiming that it did not understand the claims of the opposing party on the technical details provided and that it was unable to comply with the time limits for submitting its defense when it did not argue before the arbitral tribunal that the time limits set for it were too short; Whereas, therefore, Y is not entitled to invoke before the judge of the exequatur the violation of due process (in French: principe de contradiction) by the arbitral tribunal;

Whereas the ground is dismissed and the order of exequatur is confirmed;

On the other claims;

Whereas the unsuccessful appellant is ordered to pay the costs and her claim pursuant to article 700 of the Code of Civil Procedure is dismissed;

Whereas the sum of EUR 8,000 is allocated to B on the basis of this article;

FOR THESE REASONS,

Confirms the order of exequatur;

Orders the company Y to pay to the company BINDUCTIVE COMPONENTS AG the sum of EUR 8,000 pursuant to article 700 of the code of civil procedure;

Orders it to pay the costs and admits the SCP DUBOSCQ-PELLERIN for the benefit of article 699 of the code of civil procedure.