Paris Court of Appeal, No. 11/09601

Paris Court of Appeal, 26 March 2013, No. 11/09601

EGYPTAIR HOLDING vs. PENINSULA PUBLISHING LIMITED

Following an international invitation to tender for the publication of a magazine entitled “Houros”, the EGYPTAIR HOLDING company (EGYPTAIR), incorporated under Egyptian law, entered into a three-year publishing contract with PENINSULA PUBLISHING LIMITED (PENINSULA), incorporated under English and Welsh law, on 11 July 1992.

This contract, after being tacitly renewed four times, was terminated by EGYPTAIR by a letter dated 30 May 2004, effective 30 June 2005.

A dispute having arisen between the parties regarding the conditions of this termination, PENINSULA, pursuant to the arbitration clause stipulated in the contract, filed a request for arbitration with the Cairo Regional Commercial Arbitration Center, by petition dated 27 April 2005, for a ruling on its claim for compensation for abusive termination of the contractual relationship.

It is under these conditions that the arbitral tribunal composed of Mr. C D E, Mr. A D-K, arbitrators and Mr. K A, chairman, rendered in Cairo on 28 December 2006 an award No. 440/2005 under the terms of which it ordered EGYPTAIR to pay PENINSULA a sum of 200,000 pounds sterling by way of damages as compensation for the loss suffered by PENINSULA as a result of EGYPTAIR’s failure to comply with its obligation to notify its decision to terminate the contract within one full year prior to its effective date.

By order dated 9 October 2007, the president of the Cairo Court of Appeal granted enforcement (in French Exequatur) to this award, which was overturned by a decision of the Cairo Court of Appeal dated 6 May 2008, itself overturned by a decision of the Egyptian Court of cassation.

On 7 April 2009, PENINSULA filed a new request for arbitration with the Cairo Regional Commercial Arbitration Center pursuant to the arbitration clause stipulated in the publishing contract in order to obtain compensation for damages arising from the unilateral termination of the contract by EGYPTAIR.

A new arbitral tribunal was constituted and rendered in Cairo on 17 May 2010 a new award No. 621/2009 under the terms of which PENINSULA’s claim for compensation was, inter alia, dismissedd.

By order dated 8 October 2010, the president of the Paris Tribunal of Grande Instance, on the request of PENINSULA, declared the arbitral award No. 440/2005 dated 28 December 2006 enforceable in France.

By declaration dated 20 May 2011, EGYPTAIR appealed against this decision, requesting the court by submissions filed on 8 November 2012 to:

• dismiss PENINSULA’s pleas of inadmissibility and objections to jurisdiction,
• overturn the referred order,
• recognise the award No. 621/2009 of 17 May 2010 rendered under the supervision of the Cairo Regional Commercial Arbitration Center,
• Dismiss PENINSULA from all its requests,
• order PENINSULA to pay the sum of 10,000 euros pursuant to article 700 of the Code of Civil Procedure.

In its submissions filed on 19 October 2012, PENINSULA requested :

• that the pleas of inadmissibility raised for the first time by EGYPTAIR in its submissions filed on 3 July 2012 be declared inadmissible and, furthermore, that they be dismissed,
• that the order referred be consequently upheld,
• that the request for recognition of Award No. 621/2009 be declared inadmissible,
• that Exhibit No. 5 communicated by EGYPTAIR on 28 September 2012, be rejected,
• that EGYPTAIR be ordered to pay a sum of 50,000 Euros as damages for abusive appeal, in addition to a sum of 10,000 Euros pursuant to article 700 of the Code of Civil Procedure.

UPON WHICH :

On the request for rejection of Exhibit No. 5.

Considering that PENINSULA requests the rejection of Exhibit No. 5 submitted by EGYPTAIR under articles 906, 908 and 909 of the Code of Civil Procedure and the opinion of the Court of Cassation rendered on 25 June 2012.

Considering, however, that only the new documents, invoked in support of the claims, which are not communicated simultaneously with the notification of the submissions, should be excluded from the proceedings;

In the present case, Exhibit No. 5 filed by EGYPTAIR, which consists of the CRCICA arbitral award No. 621-2010 accompanied by its sworn translation, cannot be considered as a new exhibit since it was filed at the time of the notification of the initial pleadings, accompanied by a free translation of excerpts;

that the request for rejection must, therefore, be dismissed.

On the pleas of inadmissibility raised by EGYPTAIR to the request for enforcement (in French Exequatur) based on the principle of estoppel and res judicata attached to award No. 621/2009.

Considering that EGYPTAIR argues that PENINSULA, by a conduct contrary to procedural loyalty and good faith, violated the rule of estoppel, which is a general principle of law and whose scope of application cannot be limited to the litigation of the annulment, in particular with regard to the provisions of article 749 of the Code of Civil Procedure. Thus, the application for the enforcement (in French Exequatur) of award No. 440/2005 of 28 December 2006 comes up against the plea of inadmissibility drawn from the authority of res judicata attached, according to the will of the parties as expressed during the arbitral proceedings, to the sole award No. 621/2009 of 17 May 2010.

Considering in this respect that it is in an inoperative way that PENINSULA considers that these pleas of inadmissibility would be inadmissible because they were not raised in the initial submissions of EGYPTAIR since, in the ordinary proceedings with compulsory representation to which the appeal of the order which ruled on the enforcement (in French Exequatur), the parties may, until the closing of the investigation, invoke new grounds.

Considering, however, that PENINSULA rightly argues against EGYPTAIR that in application of the combined provisions of articles 1525 and 1520 of the Code of Civil Procedure, the grounds of refusal of recognition are exhaustively listed so that the pleas of inadmissibility raised by EGYPTAIR against the request for enforcement (in French Exequatur) drawn from the estoppel and the authority of res judicata must be set aside.

On the ground based on the infringement of international public order (Article 1520-5 of the Code of Civil Procedure):

Considering that, in the alternative, EGYPTAIR contends that because it was rendered, in disregard of the principle of estoppel, in violation of the authority of res judicata and in disregard of the principles of good faith and procedural fairness, the award that PENINSULA is attempting to resuscitate, breaches international public order in a flagrant, effective and concretel manner order, which prohibits its recognition and enforcement in France.

Considering that, following the annulment of the award rendered on 28 December 2006 by a decision of the Cairo Court of Appeal of 6 May 2008, PENINSULA, after appealing this decision before the Court of cassation, filed a new request for arbitration with the Cairo Regional Commercial Arbitration Center on 7 April 2009.

Considering that in its request for arbitration, PENINSULA, after reminded the annulment of award No. 440 of 2005, invoked its right to resort to a new arbitration in application of the arbitration clause in order for the dispute to be decided again ;

Thus, if in its statement of 2 November 2009, PENINSULA, in response to EGYPTAIR’s request for an adjournment of the proceedings until the appeal in cassation is decided, argued that the decision of the Court of Appeal setting aside the award is “final” and if in its final statement it stated that “all the proceedings that took place in [the first] arbitration and the award rendered therein are to be considered as non-existent", it should be noted, without any need to stop at the literal meaning of the terms used which is besides contradicted by the argument developed. It limited itself to highlight the “enforceable nature, in the absence of a decision suspending its enforcement” of the said judgment, “the mere appeal against this judgment does not suspend its res judicata effect” and to maintain that the decision to be taken by the Court of cassation was not a preliminary question on which the examination of the dispute subject to arbitration depended;

Considering that the waiver to a right involving acts, which unequivocally manifest the will to waive, it cannot be inferred from the position taken by PENINSULA before the second arbitral tribunal, a waiver for the benefit of the first award ;

EGYPTAIR which, in support of its request for an adjournment of the proceedings, pointed out the risk of contradictory decisions, thereby showing that it was aware that, in view of the pending appeal before Court of cassation (in French Pourvoi en cassation), the initial award was likely, if need be, to regain its full effect in the State of the seat of arbitration, if the annulment decision were to be set aside, cannot validly claim that PENINSULA’s attitude would have convinced it that PENINSULA considered that the parties would be bound only by the second award. So the principle of estoppel cannot be regarded as violated.

Considering furthermore that if it is a fact that PENINSULA sought recognition in France of the award of 28 December 2006 only after its claim for compensation was rejected by the second award rendered in Cairo on 17 May 2010, the circumstance that PENINSULA may have thereby disregarded good faith and procedural fairness is inoperative since such breaches cannot, in any event, and in the absence of any procedural fraud, neither invoked nor demonstrated in the case in point, characterise one of the ground of annulment found in article 1520 of the Code of Civil Procedure.

On the ground alleging that the award No. 440/2005 and the award No. 621/2009 of 17 May 2010 are inconciliable

Considering that EGYPTAIR, which incidentally requests the recognition of award No. 621/2009 of 17 May 2010, maintains that its lack of compliance with award No. 440/2005 objects to the recognition of the latter on French territory.

Considering that under the provisions of article 1484 of the Code of Civil Procedure, made applicable in international arbitration by article 1506-4 of the same Code, the arbitral award has, as soon as it is rendered, the force of res judicata with respect to the dispute it decides on;

Considering that award No. 440/2005 of 28 December 2006 and award No. 621/2009 of 17 May 2010 entail legal consequences which are mutually exclusive, the former allowing PENINSULA’s claim for compensation and the latter rejecting it. The recognition and enforcement in France of the latter, which was given in the second place, would, in view of this non-compliance, run up against the French conception of international public order, which is sufficient to exclude this enforcement (in French Exequatur), even if the court had the power to do so, could be conferred on it as an incidental question;

that EGYPTAIR can only be dismissed on this ground.

Considering finally that it is neither maintained nor demonstrated that award No. 440/2005 would contain provisions characterising a flagrant, effective and concrete violation of international public order ;

that it is therefore appropriate to uphold the decision referred.

Considering that there is no reason to consider that, by appealing against the decision granting the enforcement (in French Exequatur), EGYPTAIR has abused its right of appeal, an abuse which cannot be inferred from the mere rejection of its claims;

that it is therefore appropriate to dismiss PENINSULA’s claim for damages for abusive and dilatory proceedings.

Whereas EGYPTAIR which succumbs cannot claim compensation pursuant to article 700 of the Code of Civil Procedure and must be condemned on this basis to pay PENINSULA the sum of 10,000 Euros.

FOR THESE REASONS,

States that there is no reason to exclude from the proceedings Exhibit n°5 communicated by the EGYPTAIR HOLDING incorporated under Egyptian law.

Dismisses the requests made by the EGYPTAIR HOLDING incorporated under Egyptian law. Upholds the referred decision.

Dismisses the claim for damages of the PENINSULA PUBLISHING LIMITED incorporated under English and Welsh law.

Orders the EGYPTAIR HOLDING, incorporated under Egyptian law, to pay the costs to be recovered in accordance with the provisions of article 699 of the Code of Civil Procedure and to pay a sum of 10,000 euros in application of article 700 of the same Code.

THE REGISTRAR THE PRESIDENT