Court of Cassation, No. 11-13.939

Court of Cassation, First Civil Chamber, 11 May 2012, No. 11-13.939

BROUARD DAUDÉ

vs.

MORGAN RÉ

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

On the two grounds in law joined together:

Whereas, according to the judgment under appeal (Paris, 13 January 2011), Fabre Domergue sold buildings to investors who, in accordance with the condition laid down by the tax exemption law, benefitted from a guarantee of repurchase of their investment. This guarantee was provided by ICD, which was reinsured by Fabre Re, now Morgan Re, and was counter-guaranteed by receivables pledge of part of the sale price. On 7 November 2000, the Insurance Control Commission (in French Commission de contrôle des assurances) took away all the authorisations of ICD, which was placed in judicial liquidation. An arbitral tribunal rejected the request of SCP X. Y., liquidator of ICD, to order Morgan Re to pay;

Whereas SCP X. Y., contends that the judgment dismissed its application for annulment of the award, then, according to the ground;

1°/ that the control of the Court of Appeal, seized of an action for annulment of an arbitral award for violation of international public order, must relate to the solution given to the dispute, the annulment being incurred insofar as this solution offends against international public order ; by merely noting that the arbitral award merely referred to the company Fabre Domergue, third party to the arbitration, and to consider that no sum was owed to ICD by the company Morgan Re, the arbitrators did not establish a set-off between the alleged claim of ICD against Morgan Re and the claim of Fabre Domergue against ICD, without investigating, as requested, whether the solution of the award, which held that no amount was owed to ICD by Morgan Re since the profits were ultimately to be paid to Fabre Domergue, did not have the effect of violating the principles of international public order of judicial liquidation law, by giving preference to a creditor who did not declare his claim to the detriment of other creditors who could not share the amount due to ICD, the Court of Appeal deprived its decision of legal basis with respect to the old articles 1504 and 1502-5 of the Code of Civil Procedure, which became article 1520-5 of the same code;

2°/ that the arbitrators must comply with their mission; that in this case, the arbitration agreements merely gave the arbitrators the mission to rule on “the dispute on the interpretation of the clauses or the execution” of the agreements binding ICD and Morgan Re, without providing the possibility for the arbitrators to refer to the situation of third parties; that by ruling that the arbitrators complied with their mission by “referring to Fabre Domergue for the purposes of their reasoning”, the Court of Appeal violated Article 1134 of the Civil Code, together with Articles 1504 and 1502-3 of the Code of Civil Procedure, which became Article 1520-3 of the same Code;

However, since the judgment holds that the arbitrators limited themselves, for the purposes of their reasoning, to mention Fabre Domergue, without acknowledging any claim against it, and considered that no sum was owed to ICD by Morgan Re; that the court of appeal, noting the absence of set-off between the alleged claim of ICD against Morgan Re and the claim of Fabre Domergue against ICD, deduced exactly from this, without having to carry out the research allegedly omitted, that the recognition and enforcement of the award were not contrary to international public order;

Finally, having noted that the arbitral tribunal referred, for the needs of its reasoning only, to the role of Fabre Domergue in the economy of the contract, the Court of Appeal rightly deduced that the arbitrators complied with their mission ; that the arguments were unfounded;

FOR THESE REASONS

REJECTS the appeal ;

Orders SCP X… Y…, in its role as liquidator of ICD, to pay the costs;

Having regard to Article 700 of the Code of Civil Procedure, dismisses the applications ;

Thus done and judged by the Court of Cassation, First Civil Chamber, and pronounced by the President in its public hearing of the eleventh of May two thousand and twelve.