Paris Court of Appeal, No. 10/18442

Paris Court of Appeal, Pole 1, First Chamber, 26 June 2012, No. 10/18442 11/09825 11/036411

SOCIETA EDILE COSTRUZIONI E LAVORI S.P. A vs. COMPANIA NATIONALA DE AUTOSTRAZI SI DRUMURI NATIONALE DIN ROMANIA SA

The company COMPANIA NATIONALA DE AUTOSTRAZI SI DRUMURI NATIONALE DIN ROMANIA SA (Autostrazi), a joint-stock company under Romanian law, the project owner, entrusted to the company SOCIETA EDILE COSTRUZIONI E LAVORI S.P. A (SECEL), a public limited company under Italian law, the rehabilitation of different sections of the Romanian national road DN 65 under the terms of three contracts concluded on 11 February 1999: “contract No. 206”, “contract No. 207” and “contract No. 208” governed by Romanian law and including the General Conditions of the International Federation of Consulting Engineers (FIDIC).

Subsequent to the execution of the works, SECEL, pursuant to Article 67-3 of the FIDIC General Terms and Conditions providing for action to arbitration in the event of disputes between the parties and a conciliation procedure prior to the submission of a request for arbitration, referred claims under each of the contracts to the Engineer appointed by the contracting authority.

On 23 April 2003, the Engineer notified his decision to the parties.

On 2 July 2003, SECEL notified Autostrazi of its will to initiate arbitration proceedings.

Amicable negotiations have begun between the parties.

On 21 April 2006, SECEL initiated arbitration proceedings before the ICC.

In a partial award rendered in Paris on April 2, 2010, the arbitral tribunal composed of a sole arbitrator (the Arbitrator), Mr. D E F, dismissed SECEL’s claims under the three contracts ‘in that they are time-barred under the terms of Romanian Decree No. 167/1958, in so far as they are inadmissible, except for the submissions set out in paragraph 4 below’. The arbitral tribunal also reserved its decision on claims no. 4 and 7, the amounts of which have been recognized by Autostrazi, as well as on the price revision applicable to those amounts.

By a final award of 21 January 2011, the arbitrator ordered Autostrazi to pay SECEL an amount under each of the three contracts totalling approximately RON 28,000 and EUR 20,000 plus interest and ordered SECEL to pay Autostrazi an amount of EUR 2,141,205 as a contribution to the fees and costs of the proceedings incurred in the arbitration.

By an addendum of 15 March 2011 to the final award of 21 January 2011, the arbitrator, “reformulating” the operative part of the final award, reduced SECEL’s contribution to the fees and costs of the arbitration proceedings to EUR 2,106,475.89.

SECEL filed an action for annulment against the partial arbitral award, the final arbitral award and the addendum to the final award respectively on 10 September 2010, 25 February 2011 and 24 May 2011, proceedings, registered under numbers RG 10/18442, RG 11/03641, RG 11/09825.

In its submissions of 10 May 2012, SECEL seeks the joinder of the proceedings, the annulment of the three sentences, the dismissal of Autostrazi’s claims and an order that Autostrazi pay him EUR20,000 excluding VAT pursuant to Article 700 of the Code of Civil Procedure. Based on the former articles 1502 (currently article 1520) and 1504 of the Code of Civil Procedure, it maintains, firstly, that the Arbitrator made a denial of justice in the three awards and, secondly, that the Arbitrator violated due process (in French Principe de la contradiction) and procedural public order by his final arbitral award and his addendum.

In its submissions of 4 May 2012, Autostrazi requests the dismissal of the action for annulment and, more generally, of SECEL’s claims, and requests the Court to order SECEL to pay a civil fine of EUR3,000 under Articles 32-1 and 559 of the Code of Civil Procedure and to pay it the sum of EUR30,000 under Article 700 of the Code of Civil Procedure for its abusive action. It contests any denial of justice by the Arbitrator and argues that the recognition and enforcement of the partial award does not contravene the French concept of international public policy.

UPON WHICH,

On the junction,

Since the proceedings for the annulment of the partial arbitral award, the final award and the addendum to the final award were separately registered under RG 10/18442, RG 11/03641, RG 11/09825, it is appropriate for the proper administration of justice in related cases to join them under RG 10/18442;

On the first ground for annulment: the arbitral tribunal made a denial of justice and violated international public policy (Article 1502-5 of the Code of Civil Procedure, now 1520-5 of the same code)

The claimants complains that the sole arbitrator made a denial of justice by declaring its action time-barred, even though it would have been deemed inadmissible if it had not followed the preliminary proceedings before the Engineer and that compliance with this procedure determined the expiry of the prescription period for its claims. It deduced from this that in setting the starting point of the prescription period on 18 December 2002, at a date prior to the start of the preliminary procedure before the Engineer without considering its duration and that of the compulsory amicable negotiation procedure defined by articles 67-2 and 76-3 of the FIDIC General Terms and Conditions, the Arbitrator deprived it of its right to use a mandatory prescription period of three years. It therefore submits that the right to a fair trial within the meaning of Article 6.1 of the European Convention for the Protection of Human Rights and Fundamental Freedoms has been violated and that the award is contrary to international public order. In the alternative, it submits that it had no time limit for initiating arbitration proceedings since the amicable negotiations between the parties extended beyond the fixed 56-day period and that it could not interrupt them without running up against the inadmissibility of its claims. It therefore considers that it was deprived of its right of access to the judge without the possibility of intervention by the support judge to protect its rights. Finally, it argues that the final award and the addendum should also be set aside in that they confirm the denial of justice effected by the partial award.

Considering that Articles 67-1 to 67-3 of the contractually applicable FIDIC General Terms and Conditions make the party wishing to have access to arbitration to follow a preliminary procedure before the Engineer in order to obtain its opinion for a maximum period of 84 days followed, if necessary, by a maximum period of 70 days to notify its will to bring a request for arbitration, itself followed by a preliminary period of compulsory amicable negotiations for a maximum period of 56 days, unless the parties agree to extend this period;

Considering that SECEL does not show that compliance with the mechanism provided for by the FIDIC General Terms and Conditions made it impossible to submit its request for arbitration within the prescription period of three years laid down by Romanian law for claims for payment, whereas this mechanism is locked in a period of 210 days;

That it unsuccessfully objects to the extension, by agreement between the parties, and the extension of the phase of mandatory negotiations when it left Autostrazi’s last proposal dated 23 June 2004 without any action and only filed its request for arbitration on 21 April 2006, i.e. almost two years later;

It does not, therefore, establish that it was unable to bring the matter before a court, whereas its claims are time-barred only because it was negligent in the late submission of its request for arbitration;

That thus no denial of justice or disregard for the right to a fair trial within the meaning of Article 6.1 of the European Convention for the Protection of Human Rights and Fundamental Freedoms is characterised and no violation of international public order is established;

Considering that SECEL, who criticises the Arbitrator’s decision that the prescription starts from the date on which “the right was first deprived or disputed” without considering the preliminary procedure and mandatory negotiations, is in fact inviting the annulment judge to review the merits of the award, which it is prohibited from doing;

That the ground for the annulment of the partial award and therefore of the final award and its addendum, based on the existence of a denial of justice and the violation by the sole arbitrator of international public order, is rejected;

On the second ground alleging that the arbitral tribunal disregarded due process (in French Principe de la contradiction) (Article 1502-4, now Article 1520-4 of the Code of Civil Procedure):

The claimant objects to the final award and the addendum, in which the sole arbitrator rule, without hearing it on the organisation and timetable of the procedure, by adopting Autostrazi’s indications and not to correcting the ‘denial of justice’ in the partial award.

Considering that the due process (in French Principe de la contradiction) requires that each party be put in a position to debate the facts of the case in an adversarial manner and that nothing that is used as a basis for the arbitrator’s decision escapes the adversarial debate of the parties;

Considering that in this case, the Arbitrator who proposed on 9 April 2010 a timetable for dealing with claims not time-barred and the cost of arbitration, inviting the parties to consider the advisability of a possible amicable settlement until 7 May 2010, extended this deadline twice to 28 May and 25 June 2010, before rejecting by order of 28 June 2010 a new claim by SECEL, whereas X reiterated on 22 June its willingness to resume the arbitration proceedings without delay and made known its position on the timetable and terms of the arbitration proceedings as early as 28 May 2010;

Considering that SECEL does not demonstrate the Arbitrator’s violation of due process (in French Principe de la contradiction) even though the time limits granted enabled it to state its position and that it was informed that it was required to make known its comments on the continuation of the arbitration proceedings by 25 June 2010 at the latest (letter from the Arbitrator dated 28 May 2010):

That the ground based on the breach of due process (in French Principe de la contradiction), which is factually unfounded, is rejected and therefore the violation by the Arbitrator of Procedural Public Order;

On the request for a civil fine,

Considering that Autostrazi, who does not show that the claimant abused its right to take legal action or acted in a dilatory manner, is dismissed of its claim for a civil fine based on Articles 32-1 and 559 of the Code of Civil Procedure;

On applications under Article 700 of the Code of Civil Procedure:

Considering that the unsuccessful claimant is dismissed on this basis and is ordered to pay Autostrazi the sum of EUR 20,000;

FOR THESE REASONS:

Holds the junction under number RG 10/18442 of affaires enlisted under numbers RG 11/03641, RG 11/09825;

Dismisses the action for annulment;

Dismisses company SECEL’s claims;

Dismisses company Autostrazi’s application for a civil fine;

Orders SECEL to pay Autostrazi the sum of 20,000 euros pursuant to Article 700 of the Code of Civil Procedure.

Orders it to pay the costs and admits SCP DUBOSQ and A to benefit under article 699 of the code of civil procedure.

THE CLERK THE PRESIDENT